Occasionally, I would like to look at insider or share buybacks to see if I am lucky to spot any hidden gems. In fact, this is also one of the more commonly used strategies by investors. Why is that so?
As the legendary Fund manager Peter Lynch once said, “Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.”
In short, a company’s management would only purchase the stock or initiate share buybacks when they perceive that the stock is undervalued. Hence, it makes sense for investors (like You and Me) to do some further research to see if the stock is really a bargain per se.
With these in mind, let’s zoom into 3 interesting companies I’ve cherry picked which have seen insiders buy shares recently.
1. iFAST Corporation Ltd
iFAST is present in Hong Kong, Malaysia, China and India. The Group offers access to investment products including unit trusts, bonds and Singapore Government Securities, stocks and exchange traded funds, and insurance products.
It also provides services such as online discretionary portfolio management services, research and investment seminars, financial technology solutions, and investment administration and transaction services to financial advisory firms, financial institutions, banks, multinational companies, as well as retail and high net worth investors in Asia.
On 1st June 2020, its CEO and Chairman Lim Chung Chun purchased 124,000 shares through market transactions. Shares were bought at approximately $1.10 per share. After the acquisition, it increased his percentage of shares held to 22.3%.
As of the latest Q1 2020 report, iFAST’s revenue increased by 41.5% to $38.5 million. Net profit increased by a drastic 132.1% to $3.6 million. Free cash flow was at $2.8 million. Cash balance is at $21 million, which is enough for it to maintain its operations.
iFAST last closed at $1.10, which values it at a P/E ratio of 26.2 and dividend yield of 2.86%.