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A VeriFone Systems Inc (PAY) Insider’s Trust Bought About 28,000 Shares

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On July 10th, a family trust connected to VeriFone Systems Inc (NYSE:PAY) Board member Jeffrey Stiefler purchased 27,900 shares of stock at an average price of $17.89 per share. Insider purchases are often treated as bullish signals, as the insider would be reluctant to buy more shares and increase their company-specific risk unless they had a good deal of confidence in the company (according to economic theories of rational diversification). Our database of insider trading filings shows that two other VeriFone Systems Inc (NYSE:PAY) insiders were buying the stock during the month of June; studies show that stocks bought by multiple insiders are particularly likely- though, of course, not certain- to outperform the market. Read our analysis of studies on consensus insider purchases.

Verifone produces electronic payment systems used by retailers at the point of sale (for example, devices that consumers use to swipe their credit card to pay for their purchases). The stock price dived in February after disclosing preliminary first-quarter results far below analyst expectations and issuing disappointing guidance numbers, and is still down 41% year to date. Revenue for the second quarter of VeriFone Systems Inc (NYSE:PAY)’s fiscal year (the quarter ending in April) ended up being down 10% versus a year earlier, and even if we add back a litigation loss contingency the company’s operating income was essentially zero. Conditions were a bit better during Q1,but because of interest expenses Verifone still turned only a small pretax profit for the first six months of this FY. Cash flow from operations has been up, but only because of reductions in working capital. Wall Street analysts expect the business to somewhat improve next year, projecting $1.51 in earnings per share for a forward P/E of 12.

VeriFone Systems Inc (PAY)In addition to following insider trading activity, we also track quarterly 13F filings from hundreds of hedge funds and other notable investors. We’ve found that this information can be useful in developing investment strategies; for example, the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year (learn more about our small cap strategy). We can see from our database that billionaire Ken Griffin’s Citadel Investment Group reported a position of 1.2 million shares as of the end of March (check out Griffin’s stock picks).

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