Duane Bair
Long/short equity, contrarian, special situations, research analyst

Primerica; Bad Company, Compelling Stock

When reading Primerica's (NYSE:PRI) annual statements and presentations, investors are told that Primerica is a leading insurance and financial services company. In reality it is nothing more than a multi-level marketing company that sells term insurance and some investment products through various partners. Making the distinction between a financial company and a MLM is key to understanding the Primerica business model. While Primerica's shares have done well since the 2010 IPO, the business has stalled for years. EPS growth is almost entirely reliant on the share buyback. Regulatory issues in the Canadian business and low exposure to increasing interest rates will have long negative effects on the business. Short term, however, recruitment trends and proper capital deployment will...

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