Tropicana Corporation Berhad or TROP as it appeared on Bursa Malaysia is a moderately traded stock with an average daily volume of some 659,200 shares over the past 12-months period.

TROP is one of the most active "executor" of Company Shares Buy Back Scheme you can find in Bursa Malaysia today. TROP buys back its own shares almost on a daily basis, as data from its own disclosure to the Exchange shows.

Whilst it is a good thing for a listed issuer such as TROP to buys back its own shares and to tighten the number of shares in circulation. Conventional wisdom believed that with lesser issued shares in circulation, it will either increase or improve the NTA, PE ratio, EPS, dividend yield and et cetera along the way.

I do agree with this general perception. But I am also a strong advocate that when a listed issuer is exercising discretionally the authority entrusted upon it by the general shareholders at large, it must do it only with the utmost integrity. And to ensure that it has done so with the best interest of the general shareholders at heart, all the time.

We all know fully well that the property market is still mired in the third year of a downward cycle. And it is going to get worse before it even gets better. Banks are cautious and selective in granting housing loan. Project financing for property developers are hard to come by nowadays. Every prudent management of development companies are scaling down operations, trimming expenditures and conserving cash wherever possible in order to weather through these difficult periods.

And I failed to understand why TROP, with an almost RM 1 billion loan and commitments still outstanding and exacerbated by both falling revenues and net profits in recent years, would still bulldozing ahead with the shares buy back. As a matter of fact, it is even more aggressive now than before. This got me interested and I started calling some credible sources to find out.

But before I present the result of my 'espionage' work, in order for you to grasp the full scenario before putting your bet on TROP, you should get acquainted first with the second limb of my writing ie Trading During Close Period.

By Bursa Malaysia's definition, Close Period refers to the time period between the completion of a listed issuer's financial results and the announcing of these results to the public. The Close Period is prescibed as the one-month period preceding the release of a listed issuer's quarterly financial result, and the two-month period before the release of its annual financial result. Parties affected by this Close Period embargo for trading are members of the listed issuer's board of directors and substantial shareholders, and their immediate family members. Of course, should they choose to trade in their shares, they may do so by making disclosure of their intention in dealing with their shares to Bursa Malaysia by way of a public announcement.

In a hypothetical situation, this Close Period mechanism will help to prevent a company's insider from disposing their shares who may have the advance inside information that the company's financial result is unwell. Thus, the Close Period mechanism strives to have a level playing field for both insiders and general public investors of sort.

However, an insider can always circumvent this Close Period imposition easily. Selling through his nominees can be one common practice. But if a company's shares is thinly traded over a prolonged period, the nominees-way may not be a viable option. More so when an insider needs to dispose a large chunk of his shareholdings without alerting awareness of the public. In this circumstances, selling slowly through the open market over a protracted period without causing much movement to its daily shares price seems to be the only way an insider can quietly dispose his large shareholdings.

But selling through a protracted period takes months, which will inevitably cross into Close Period. The mirage would then be an emergence of an endless stream of willing takers or buyers for these shares. But what if you can't find these takers or buyers? The answer will then be : Go create one!

Company Shares Buy Back Scheme is the best tool in simulating this mirage. What's more it is the insiders that control the buying and the timing. Always at their pleasure, or whims and fancy, if I may say.

And I am about to kick a hornet's nest next.

~~ to be continued.........