June 7, 2008
THE steep fall in the market this month which saw the Straits Times Index plunge by nearly 7 per cent to 2,979.56 points on Friday has resulted in a surge in the buyback activity and increase in the sales by institutional shareholders. The sharp fall in share prices also prompted directors of several firms to buy shares for the first time since listing.
On the buybacks side, a total of 17 listed firms have recorded 102 repurchases worth $25.4 million so far this month. The number of companies has already exceeded the 15 firms that bought back shares last month and there are still two weeks remaining in June.
The number of trades and value, on the other hand, are not far off from the previous month's 130 repurchases and $38.2 million.
Among the firms that recorded rare buybacks and initial director purchases this month are SC Global Developments and StarHub Ltd.
Fund managers, on the other hand, bumped up their sales from the previous week with huge disposals in AusGroup Limited, Zhonghui Holdings, and Yellow Pages (Singapore) Limited. To show how bearish the institutional shareholder sentiment was last week, several fund managers sold heavily at below their initial filing prices.
There was a rare insider buy and more buybacks in information, communications and entertainment services provider StarHub Ltd this month.
CEO Steven Terrell Clontz recorded the first trade by a director of the company since the stock was listed in October 2004 with 150,000 shares purchased on June 13 at $2.68 each. The trade increased his direct holdings to 6.8 million shares or 0.4 per cent.
The company, on the other hand, bought back 800,000 shares from June 4 to 6 at $2.84 each. The group previously acquired 600,000 shares from May 20 to 21 at $2.84 each and 5.4 million shares from August to December 2007 at $2.78 to $3.00 each.
The rare insider buy and repurchases since May were made on the back of the drop in the share price since the second half of April from $3.14.
StarHub Ltd announced its first quarter results on May 7 with net profit up by 14.5 per cent to $80.1 million for the three months to March 31, 2008. The stock closed at $2.70 on Friday.
Personally I feel if you see insiders buying up their own shares in huge amounts, it is a good sign. After all, there are many reasons for human to sell his shares, but only one reason to buy shares.
To make more money!