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6 days ago
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Watch the Surge of Insider Buying at UnitedHealth Group
June 16, 2025 (Maple Hill Syndicate) You might think UnitedHealth Group Inc. (NYSE:UNH) would be on the ropes. One of its top executives was shot dead, its CEO resigned for personal reasons, and the federal government is probing its billing practices. But executives at this health-insurance and health-services giant apparently don't think doom is knocking at the door. Five of them have bought the company's stock in the past few weeks, including CEO Stephen Hemsley. Warning! GuruFocus has detected 4 Warning Sign with UNH. Barrage The barrage of bad news that has hit United Health this year is remarkable. Here's a chronology of some of the events that have rocked the company in the past six months. On December 4, 2024, a gunman shot and killed Brian Thompson, the CEO of UnitedHealthcare, the company's insurance arm and biggest component. Five days later, police arrested Luigi Mangione, a 26-year- old cum laude graduate of University of Pennsylvania with a master's degree in computer science. Shell casings at the scene of the crime bore the words delay, deny, depose. A number of Americans expressed more outrage against insurance companies than they did against the murder. On May 13, UnitedHealth Group said that CEO Andrew Witty had resigned for personal reasons. On May 14, the Wall Street Journal reported that the U.S. Department of Justice is investigating the company for possible criminal Medicare fraud. The company said it hasn't been notified of any investigation. In the past half-year, the stock has declined from well over $600 to the present price of about $313. Buyers On May 16, Hemsley paid $25 million to buy 86,700 shares of the giant health-insurance and health-care company. That was the largest purchase by a corporate insider at any company in May and early June. He served as UnitedHealth's CEO from 2006 to 2017. He resumed that office in May, taking over from Witty. After his big purchase in May, Hemsley now owns 1,112,339 shares, worth about $349 million at the June 13 closing price of $313.53. John Rex, the company's president and chief financial officer, spent close to $5 million on May 16 to add to his holdings, now worth about $66 million. Three directors, Kristen Gil, John Noseworthy and Timothy Patrick Flynn, also bought some shares on May 14 and 15. Punished Has this stock been punished too harshly? In my opinion, yes. UnitedHealth Group hasn't had a loss in the past 30 years. In the past decade, its revenue and earnings have grown at double-digit rates, averaging more than 11% a year for revenue and 17% a year for earnings. The stock now fetches a down-to-earth multiple of 13 times earnings. The typical multiple in the past ten years has been close to 22. The balance sheet doesn't look bad either. The company's debt is about 86% of stockholders' equity, which is within the band I consider okay. The company's profitability looks strong. I consider a 15% return on stockholders' equity good, and 20% excellent. UnitedHealth Group in the past four quarters has been 24%, and it has been above 20% in seven of the past eight years. It's worth noting that the recent buying represents a trend reversal. From June 2022 through the end of 2024, no insiders bought shares but several sold. This year, almost all of the activity has been on the buy side. My guess, therefore, is that Hemsley and the other UnitedHealth executive will end up being glad about their May purchases. The Record Today's column is the 74th one I've written about insiders' purchases and sales. I can tabulate one-year results for 64 of them all those from beginning of 1999 through a year ago. A year ago, I recommended Globe Life Inc. (NYSE:GL) and Skyworks Solutions Inc. (NASDAQ:SWKS). The former rose 50.3% but the latter slumped 19.5%. For the same period, the Standard & Poor's 500 Total Return Index returned 14.5% Stocks that I recommended based on insider buys have returned an average of 9.2% a year decent, but 1.3 percentage points less than the index. Stocks that I said to avoid, even though insiders were buying, have under-performed the index by 24.3 percentage points. Stocks where I noted insider buying, but made no comment (or an ambiguous comment) have beaten the index by 14.1 percentage points. Stocks where I noted insider selling have done 2.3 points worse than the index. Bear in mind that my column results are hypothetical and shouldn't be confused with results I obtain for clients. Also, past performance doesn't predict the future. Disclosure: I own UnitedHealth Group shares personally and for many of my clients. John Dorfman is chairman of Dorfman Value Investments in Boston. His firm of clients may own or trade securities discussed in this column. He can be reached at jdorfman@ This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-06-2025
- Business
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Why I'll Continue to Invest in Gold, at Least for Another Year
June 2, 2025 (Maple Hill Syndicate) - About 14 months ago, I wrote a column about gold. I don't think gold is an investment for all seasons, I wrote, but right now, I think it's sensible to hold some. That turned out to be right. Gold is up about 51% since I made that recommendation, including a 25% gain this year through May 30. So, what now? Take your golden profits and run? I don't think so. Most of my clients have about 6% of their portfolio assets in gold, and I'm considering increasing that. Gold doesn't have profits or pay dividends, so evaluating it is harder than evaluating a stock. However, I think there are four major factors that move the price of gold: inflation, real interest rates, the dollar and geopolitics. Inflation Gold is traditionally considered a hedge against inflation, because it tends to hold its purchasing power. Today a Big Mac sandwich costs about $6 and an ounce of gold sells for about $3,300. So, one ounce of gold could buy 555 Big Macs. If inflation worsens and a Big Mac three years from now costs $8, it would not be surprising for gold to command a price of $4,400. Then an ounce of the previous metal would still pay for 555 Big Macs. Will inflation worsen? After all, a few days ago President Trump said that he had solved inflation. In support of that assertion, he has said repeatedly that the price of gasoline is under $2 a gallon. I hate to break it to the President, but when I bought gas last week it cost $2.99 a gallon. Meanwhile, Congress appears likely to pass a budget that features a gigantic budget deficit. To finance deficits, the U.S. Treasury may be forced to issue more bonds. Many economists view that as inflationary. In addition, the tariffs that President Trump has proposed would add to inflation, in my view, by making a variety of goods more expensive. Real Rates For gold, low real interest rates are good and high real interest rates are bad. The real interest rate is the rate paid on fixed-income instruments like bonds, minus the inflation rate. An old rule of thumb was that bond investors want to earn three percentage points more than inflation for example, a 6% interest rate if inflation is running 3%. That rule turned out to be too simplistic, but the general point behind it is valid. Gold and bonds are competitors: They compete for the dollars of risk-averse investors. If bonds are more attractive, gold is less so. Ten-year Treasury bonds currently pay about 4.4% interest. Inflation for the year through April was about 2.3%. So, the real interest rate is somewhere in the neighborhood of 2.1%. That's not terrible but it's below the historical average. The Dollar The strength of the dollar is partly a gauge of how much faith people in other countries have in the United States. Less faith equals more jitters. More jitters may inspire a flight to gold. One thing people need dollars for is to buy U.S. goods and services. If trade barriers are erected, people and businesses in other countries have less need for dollars, so the dollar might decline in price relative to the Euro, the yen and other currencies. What would a weak dollar mean for gold? Historically, gold has generally done well when the dollar was weak, and poorly when the dollar is strong. There are exceptions, notably 2023-2024, when the dollar was strong and gold rose nevertheless. Ned David Research, an outfit for which I have considerable respect, is predicting a weak dollar and strength in gold for 2025. Geopolitics The more stress there is in the world, the better for gold. In the U.S., people worried about geopolitical tensions may buy gold as a defensive holding. That's even more true in China, India and Europe. Despite sporadic efforts at peace talks, there are two hot wars in progress between Russia and Ukraine, and between Israel and Gaza. In addition, there are at least two notable cold wars, between the U.S. and China, and between the U.S. and Iran. To me, that geopolitical backdrop most likely signals continued strength in gold. Bear in mind that most performance information in my column is hypothetical and shouldn't be confused with results I obtain for clients. Also, past performance doesn't predict the future. Disclosure: Personally, and for most of my clients, I own shares in SPDR Gold Shares (GLD), an exchange traded fund that represents ownership of a fraction of a large store of physical gold. John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts. He or his clients may own or trade securities discussed in this column. He can be reached at jdorfman@ This article first appeared on GuruFocus.
Yahoo
28-05-2025
- Business
- Yahoo
5 Companies That Consistently Buy Back Their Own Shares
May 26, 2024 -- (Maple Hill Syndicate) When a company buys back its own shares, shareholders often benefit. With fewer shares outstanding, each share is likely to be worth more. In the past 20 years, buybacks have become increasingly popular. Many companies prefer them to dividends because they have a softer tax impact. Dividends stick shareholders with taxes on their next tax return, while buybacks don't. Of course, companies can also do both dividends plus buybacks. Warning! GuruFocus has detected 6 Warning Signs with BOM:542905. Buybacks can be a sign that a company's board of directors considers the company's stock undervalued. To be sure, buybacks are a bad idea if a company takes on excessive debt to fund them, or if the buyback siphons off cash that would be better used to beef up the company's core business. On the whole, though, I view buybacks as a good sign. Standard & Poor's has a Buyback Index (basically the 100 stocks in the S&P 500 with the highest percentage of buybacks). In the past five years, it has beaten the S&P 500 Total Return Index by about seven percentage points cumulatively, returning 16.29% a year versus 15.61% for the S&P 500. Over the past 25 years, the Buyback Index has outperformed the benchmark S&P 500 18 times out of 25. Here are five companies that stand out for their consistent use of buybacks. Each has bought back more than 4% of its shares per year over the past one, three and five years. MetLife MetLife Inc. (NYSE:MET), based in New York City, is one of the largest insurance companies in the U.S. It specializes in group benefit packages. Last year it took in about $45 billion in premiums, and another $18 billion or so in investment income. It paid out roughly $43 billion in claims. In the past five years, MetLife has bought back, on average, 5.8% of its stock each year. During that time, the stock has risen about 114%. The stock seems reasonable priced to me, selling for less than 13 times earnings and about 0.75 times revenue per share. Pulte Nobody wants homebuilding stocks these days. Mortgage rates are unpleasantly high, and home prices are steep (a mixed blessing for homebuilders). New home sales this year have been weak, bordering on terrible. Several homebuilding companies have been buying back their own stock. One that I like is PulteGroup Inc. (NYSE:PHM), whose average home sells for about $570,000. That's a few notches higher than the U.S. average (about $504,000) and median price (about $438,000). Who knows when industry conditions will improve? It's not clear, but if you're a patient investor, you can take heart from the fact that homebuilders have enjoyed periodic booms in the past. Pulte stock, like that of other homebuilders, is cheap at present, selling for about seven times earnings. Pulte has bought back about 6% of its stock annually in the past five years. Academy Sports Also at seven times earnings is Academy Sports and Outdoors Inc. (NASDAQ:ASO), which has its headquarters in Katy, Texas. It has averaged a 4% buyback in the past five years, and picked up the pace to 8% last year. Wall Street analysts are split on Academy. Of 20 analysts who cover it, half rate it a buy or outperform and half don't. But the average one-year price target for all analysts is more than $55, well above the current market price of less than $41. Employers Holdings A nearly debt-free choice is Employers Holdings Inc. (NYSE:EIG), out of Reno, Nevada. It's a workers' compensation insurer, concentrating on small and mid-sized businesses engaged in low-to-medium hazard industries. Growth has been slow here, but profitability has been consistent: No losses in the past 23 years. The company has only a speck of debt, and more than $26 in cash for each dollar of debt. Williams-Sonoma Known for high-end cookware and home goods, Williams-Sonoma Inc. (NYSE:WSM) has seen its stock quadruple in the past decade. It has been astonishingly profitable, with a return on equity recently of 52%. Analysts obviously think the party's over: Our of 25 analysts who cover the stock, only five recommend it. The reason for analysts' gloom is obvious: The company imports about 23% of its merchandise from China, the target of the harshest tariffs proposed (though currently paused) by the Trump administration. The stock is down more than 15% year to date (through May 23). It sells for about 18 times earnings, which I think is not bad considering that Williams-Sonoma has grown earnings at better than a 22% annual clip for the past ten years. John Dorfman is chairman of Dorfman Value Investments LLC in Boston, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at jdorfman@ This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-05-2025
- Business
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Why Low-Debt Stocks Are the Way to Go
May 5, 2025 -- (Maple Hill Syndicate) When President Trump was a businessman, he was famous for taking on lots of debt. Now that he's the President, I believe that companies would be smart to do the opposite. High-debt companies run at least three risks. Rising interest rates. Tariffs could make some goods scarcer. Tight immigration policy could make labor scarcer. The combination could push up inflation, leading to higher rates that make interest payments more painful. A recession. If the economy turns sour, companies with lots of debt are in danger of falling into the bankruptcy chasm. J.P. Morgan Chase thinks the chance of a recession is 60%. Uncertainty. Frequent policy changes increase uncertainty. When uncertainty reigns, low-debt companies are the safer bet. Even when the economic skies look sunny, I favor low-debt companies. All the more so now. Here are five publicly traded companies that stand out because they have little or no debt. Gentex Down 37% over the past year, Gentex Corp. (NASDAQ:GNTX) of Zeeland, Michigan, seems to me due for a comeback. The company's main product is self-dimming mirrors for cars. Car sales in the U.S. are so-so, and Gentex has stopped shipping to China. The U.S. has imposed a 145% tariff on imports from China, which has retaliated with a 125% tariff. Analysts expect Gentex's profits to fall about 3% this year, but bounce back in 2026 and 2027. Gentex is totally debt-free, and the stock sells for about 13 times earnings. Employers Holdings Employers Holdings Inc. (NYSE:EIG), out of Reno, Nevada, sells workers compensation insurance, mostly in California. It serves mid-sized and small businesses, especially restaurants. Profits haven't grown fast, but have been consistent: No losses in 23 years. The stock is cheap, selling for 1.1 times book value (corporate net worth per share). But it seems to be permanently cheap: the price-to-book ratio is the same as the ten-year average. Monarch Cement Monarch Cement Co. (MCEM), which I mentioned in a recent column on small stocks, has a market value of a little under $1 billion. It hails from Humboldt, Kansas, and does business in that state plus parts of Arkansas, Iowa, Nebraska, and Oklahoma. The company has zero debt, and lately has posted a profit margin of about 22%. Earnings are reasonable consistent: Monarch has been profitable in 14 of the past 15 years. (It had a small loss in 2011.) So far as I can tell, the company is completely neglected by Wall Street. Cal-Maine Foods
Yahoo
29-04-2025
- Business
- Yahoo
Old Faithful Fizzled Last Year, But Watch for a Spurt
April 28, 2024 (Maple Hill Syndicate) One of my favorite tools for picking stocks is a paradigm I call Old Faithful, named after the geyser in Yellowstone Park. This paradigm fizzled last year, but has an outstanding long-term record. To appear on the Old Faithful list, a stock must: Post good profits (15% return on equity). Have debt under control (debt less than stockholders' equity). Be cheap (no more than 15 times earnings and two times book value). Show decent earnings growth (averaging at least 10% a year for the past five years). Drawn from the Old Faithful screen, here are four stocks I feel optimistic about for the coming 12 months. Halliburton Halliburton Co. (NYSE:HAL), with headquarters in Houston, Texas, is one of the Big Three oilfield service companies. The other two are Schlumberger Ltd. (NYSE:SLB) and Baker Hughes Co. (NASDAQ:BKR). I consider a 15% return on stockholders' equity good and 20% excellent. Halliburton notched 20.6% in the past four quarters. Its stock is below $21 as of April 25, and the consensus of Wall Street analysts is that it will rise to $30 in the next 12 months. Of 29 analysts who cover the stock, 22 recommend it. The stock sells for about 9 times earnings, whereas over the past decade, it's usually fetched a multiple of about 17. Cincinnati Financial Based not in Cincinnati but in Fairfield, Ohio, Cincinnati Financial Corp. (NASDAQ:CINF) sells home, auto and life insurance. It does business in all 50 states and has relatively little exposure in Florida, where hurricanes often cause severe losses. Earnings growth has averaged 13% the past five years. It was faster last year, but I don't put much emphasis on that since insurers had recently won big price increases from regulators. That's not a regular occurrence. The company has very little debt only 6% of equity. Oshkosh Fire engines, garbage trucks, military trucks and aerial work platforms are the main products at Oshkosh Corp. (NYSE:OSK), based in Oshkosh, Wisconsin. The stock hasn't gone much of anywhere in three years. It sells for less than nine times earnings, compared with a typical multiple over the past decade of 15. That measure and other valuation measures are at five-year or ten-year lows. Analysts are split, with eight recommending the stock and eight demurring. Recession is a risk. In the pandemic recession of 2020, profits fell almost 50%, but the company stayed profitable. In the Great Recession of 2008-2009, it posted a big loss. I may be prejudiced, since I made a lot of money in this stock many years ago, but Oshkosh looks appealing to me. Investors might want to take a toehold now, and add to it if the shares, now at about $89, fall below $80. Southern Bancshares If you have $8,250 lying around, you can buy one share of Southern Bancshares NC Inc. (SBNC), a community bank based in Mount Olive, North Carolina. It has about 60 branches in North Carolina and Virginia. The stock is thinly traded and, so far as I can tell, completely uncovered by Wall Street. One thing I look for in a bank is a return on assets of 1.0% or better. Southern Bancshares has achieved that in five of the past six years. Ratings agencies don't regard the bank's financial strength highly; its debt gets BBB or BB ratings. That's probably why the stock is so cheap, selling for four times recent earnings and just over book value (corporate net worth per share). This is not a conservative investment, but the risk/reward ratio looks good to me. The Record Starting in 1999, I've written 22 columns featuring picks from the Old Faithful screen. (Today's is the 23rd.) The average 12-month return has been 18.96%, which is more than double the 7.88% return for the Standard & Poor's 500 Total Return Index over the same 22 periods. Be aware that my column results are hypothetical and shouldn't be confused with results I obtain for clients. And past performance doesn't predict the future. My Old Faithful picks have beaten the index 16 times out of 22, and have been profitable 15 times. My selections from a year ago failed to erupt. They fell 13.4%, while the S&P 500 returned 7.0% including dividends. Not a single one of my 2024 picks beat the index. The best performer was Farmers & Merchants Bancorp (FMCB) with a feeble 2.3% gain. Hibbett Inc. (NASDAQ:HIBB) returned only 2.1% even though it was taken over by a British company, JD Sports Fashion. My worst selection was Agco Corp. (NYSE:AGCO), down 28.9%. Disclosure: A hedge fund I run owns call options on Schlumberger. John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at jdorfman@ This article first appeared on GuruFocus. Sign in to access your portfolio
