Three Companies That Bought Back More than 1% of their shares in 2016

Share buy-back is one of the strategies that is endorsed by legendary investors such as Warren Buffet and Charlie Munger.

The logic is simple. If you have a good business and its share price is undervalued, and there are no options to deploy the cash to achieve high rates of return, you might be better off just buying back your own shares.

Thus, a company may buy back shares when its management believes that the shares are undervalued. Share buybacks do not always mean that a company is indeed undervalued. But it might be a starting point for investors to start digging deeper.

Olam International Ltd (SGX: O32) operates business in five segments. These are Edible Nuts, Spices and Beans, Confectionery and Beverage Ingredients, Food Staples and Packaged Foods and Commodity Financial Services.

In the year to date, the company has purchased 35 million of its own shares, accounting for 1.26% of the total number of shares available.

AEM Holdings Ltd. (SGX: AWX) is a microcap with market capitalisation of less than $ 22 million. The Company provides solutions in equipment systems, precision components, plating and related manufacturing services across various industries. It operates through three segments: equipment systems solutions (ESS), precision component solutions (PCS) and others

As of August 2016, the company has purchased 692,300 of its own shares, accounting for 1.6% of the total number of shares available.

Lastly, we have another small-cap that has been actively buying back its own stock in 2016, namely Soup Restaurant Group Ltd (SGX: 5KI).

The Company’s business segments include restaurants and food processing, distribution and procurement services segments. Its brands include Soup Restaurant, CAFE O and POT LUCK. As of August 2016, the company has purchased 1.02% of its own shares.

Though share buyback may be a good place to search for potential ideas, investors should perform their own research before investing in any of the companies mentioned above.

This is especially true since 2 of the 3 companies above are micro-cap companies that are less diversified in its income sources.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.