On December 31, 2024, Donald Smith & Co (Trades, Portfolio) executed a significant stock transaction involving Universal Insurance Holdings Inc (UVE, Financial). The firm added 174,843 shares to its holdings, marking an 11.31% increase in its position at a trade price of $21.06 per share. This acquisition brings the total number of shares held by Donald Smith & Co (Trades, Portfolio) to 1,720,519, reflecting the firm's strategic move to bolster its investment in UVE.

Donald Smith & Co (Trades, Portfolio): A Deep-Value Investment Firm

Founded by Donald G. Smith in 1980, Donald Smith & Co (Trades, Portfolio) is renowned for its deep-value investment strategy. The firm focuses on identifying undervalued stocks, particularly those trading at discounts to tangible book value, with a positive earnings outlook over the next 2-4 years. This bottom-up approach has been a hallmark of the firm's investment philosophy, allowing it to capitalize on out-of-favor companies with strong potential for future growth.

Universal Insurance Holdings Inc: Company Overview

Universal Insurance Holdings Inc is a private personal residential homeowner insurance company based in the USA. The company primarily operates in Florida and across the United States, generating revenue from insurance premiums. UVE develops, markets, and underwrites insurance products for consumers, focusing on personal residential homeowners' lines of business. The company's primary insurance subsidiaries, UPCIC and APPCIC, provide coverage for homeowners, renters, condo unit owners, and other related insurance services.

Financial Metrics and Valuation of UVE

UVE currently has a market capitalization of $577.608 million and a stock price of $20.42. The stock is considered modestly overvalued with a GF Value of $17.56, resulting in a price-to-GF Value ratio of 1.16. Despite this, the company's financial metrics indicate a solid foundation, with a [Financial Strength](https://www.gurufocus.com/term/rank-balancesheet/UVE) rank of 7/10 and a [Profitability Rank](https://www.gurufocus.com/term/rank-profitability/UVE) of 7/10.

Performance and Growth Indicators

UVE's [GF-Score](https://www.gurufocus.com/term/gf-score/UVE) is 74/100, suggesting likely average performance. The company has demonstrated a 3-year revenue growth rate of 11.20% and an impressive EBITDA growth rate of 54.00%. These indicators reflect UVE's potential for continued growth and stability in the insurance industry.

Impact of the Transaction on Donald Smith & Co (Trades, Portfolio)'s Portfolio

The addition of UVE shares increased the stock's position to 0.85% of Donald Smith & Co (Trades, Portfolio)'s portfolio. UVE now represents 6.10% of the firm's total holdings in the stock, underscoring the firm's confidence in UVE's potential despite its modest overvaluation. This strategic move aligns with Donald Smith & Co (Trades, Portfolio)'s investment philosophy of targeting undervalued stocks with promising future earnings potential.

Analysis of UVE's Financial Health

UVE's financial health is robust, with a [cash to debt](https://www.gurufocus.com/term/cash-to-debt/UVE) ratio of 3.29 and an [interest coverage](https://www.gurufocus.com/term/interest-coverage/UVE) ratio of 18.81, indicating strong liquidity and effective debt management. The company's [Piotroski F-Score](https://www.gurufocus.com/term/fscore/UVE) is 7, further highlighting its solid financial standing.

Conclusion

The transaction by Donald Smith & Co (Trades, Portfolio) highlights the firm's continued confidence in UVE's potential, despite its modest overvaluation. Value investors may find interest in UVE's financial stability and growth prospects as part of a diversified investment strategy. With a strong foundation and promising growth indicators, UVE remains a noteworthy consideration for those seeking to invest in the insurance sector.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.