First Eagle Investment (Trades, Portfolio) disclosed a significant stake in Duos Technologies Group Inc. (DUOT, Financial) on Nov. 21.
The firm invested in 2.93 million shares of Duos for an average price of $1.50 per share, giving it 0.01% portfolio space.
The Florida-based company provides security analytical technology solutions to a wide variety of clients, specializing in automated systems. With a market cap of $2.85 million, its shares were trading around $1.50 on Monday with a price-sales ratio of 0.53.
According to the Peter Lynch chart below, the stock is trading below its fair value.
On Nov. 21, the company announced an $11 million private placement of its Class A and Class B units. A private placement, according to Investopedia, is the direct sale of stocks, bonds or securities to a private investor, rather than as part of a public offering.
According to Duos, Class A units consisted of one share of common stock and a warrant to purchase one share of common stock. Class B units consisted of one share of Series A Preferred Stock and a warrant to purchase one share of common stock. The preferred stock is valued at $1,000 per share and is convertible to common stock at 50 cents per share. The warrants will be terminated in five years.
The private placement closed several days later, on Nov. 24.
GuruFocus ranked Duos’ financial strength 1 of 10 and its profitability and growth 2 of 10.
For the third quarter, Duos posted a loss of seven cents per share on $1.05 million in revenue. In the prior-year quarter, it posted a loss of 31 cents per share on $1.4 million in revenue.
As of Sept. 30, it records $1.17 million in total assets and $10.08 million in total liabilities on its balance sheet.
GuruFocus estimates the stock has gained 20% year to date.
First Eagle holds 154.26% of the company’s outstanding shares.
Managing approximately $116 billion in assets, First Eagle focuses on absolute returns and is dedicated to downside protection. Its portfolio of 348 stocks is largely composed of securities in the basic materials, financial services, technology and energy sectors. In 2016, the First Eagle Gloabal Fund returned 10.65%, versus the S&P 500’s 11.96% return.
Disclosure: I do not own any stocks mentioned.
