Peter Lynch, the legendary portfolio manager for Fidelity’s Magellan fund from 1977 to 1990, wrote in his bestselling book One Up On Wall Street that company insiders may sell a stock for many reasons but will buy for only one — they believe the stock price will rise.
Taking this principle a step further, stocks that pass GuruFocus’ screener for the trifecta of positive signs are Triple Buys, that is, stocks being bought not only by insiders, but also the company and gurus.
At the time of this writing, a search on the screener for Triple Buy stocks within 5% of their 52-week lows returned just 10 stocks. Three of these companies are Noble Corp, AmeriServ Financial, and 3D Systems.
Steven Cohen (Trades, Portfolio), Ray Dalio (Trades, Portfolio), and David Dreman (Trades, Portfolio) added Noble Corp (NE, Financial) as a new holding in their portfolios during the third quarter. Paul Tudor Jones (Trades, Portfolio), Donald Smith (Trades, Portfolio), and Private Capital (Trades, Portfolio) added to their existing stakes in the company. In addition, the rate of share buybacks is 10.8%, and the last six insider trades have been buys, with the most recent being in August 2014.
Noble is an offshore drilling contractor for the oil and gas industry. It performs contract drilling services with its fleet of mobile offshore drilling units. The stock price has declined 44% over the past year and is currently undervalued according to the Peter Lynch chart.
The fourth quarter of 2014 handed Noble huge losses with net income at $-610 million. This brought net income for the full fiscal year to just $8 million, down from $783 million the year before.
Jim Simons (Trades, Portfolio) purchased a new holding in AmeriServ Financial (ASRV, Financial) with 7,800 shares at an average price of $3.14 per share. Insiders have been consistently purchasing shares, with five insiders buying the stock in February, and the rate of share buybacks is 8.3%.
AmeriServ Financial is a bank holding company with 18 locations in Pennsylvania. The stock has declined 20% over the past year and currently trades at $2.99 with a P/E ratio of 13.9 and P/S ratio of 1.1.
Net income for FY 2014 was $3.02 million. The graph below shows the income trend over time.
Another stock gurus, insiders and the company is buying is 3D Systems (DDD, Financial). Jim Simons (Trades, Portfolio) purchased a new holding of 316,350 shares during the quarter, while Paul Tudor Jones (Trades, Portfolio) added to his stake by more than 40%.
In addition, director Walter Loewenbaum bought 41,479 shares of the company on four different occasions in November, and the share buyback rate is 1.1%.
The company provides 3D printers, print materials and cloud-sourced on demand custom parts in materials such as plastics, metals, ceramics, and edibles. The stock has declined 55% over the past year and currently trades at $27.84.
3D System’s net income for FY 2014 was $11.6 million, a sharp decline from $44.1 million the previous year.
Even with the declining price, the P/E ratio is currently a high 239.7 and the P/S ratio is 4.52.
View more stocks gurus, insiders, and companies are buying by visiting GuruFocus’ Triple Buys page, a premium feature. Not a Premium Member of GuruFocus? Try it free for 7 days.
