US Facilities Announces Buy-Back Plan : Market: Repurchase involves up to $5 million worth of shares. Brokers say the Costa Mesa firm is trying to bolster value of stock, which closed at $9.50 a share.

Taking advantage of what investors might see as a bad situation, US Facilities Corp. said Tuesday that it intends to buy back up to $5 million worth of its shares.

The value of the stock, which closed at $9.50 a share Tuesday, has fallen below what company officials believe it is worth and the repurchase announcement is an attempt to bolster its value.

So-called stock buy-back plans frequently are launched when the stock market is falling--more than 100 were announced in the days after the Dow Jones Industrial Average--the leading market indicator--lost 508 points on October 19, 1987.

Over the past two weeks--despite an 82-point recovery Tuesday--the market has lost 187 points.

Brokers say they have not seen a flood of buy-backs, however, and some don’t believe the market has fallen enough to cause one.

Locally, only one other large publicly traded company has announced a stock repurchase plan. Fidelity National Financial Corp., an Irvine title insurance company, said March 31 that it might buy back up to 1 million of its shares.

But Fidelity “could be trying to counter a threatened rise in interest rates and continuing soft housing sales,” said Jeffrey Kilpatrick, president of Newport Securities, a Costa Mesa brokerage. Both things threaten the company’s revenue, which is dependent on home sales and mortgage refinancing.

“The most-often given reason by companies for a repurchase is that they feel their stock is undervalued and that they can buy it back and increase the per-share value of what’s left in circulation,” Kilpatrick said.

The broker, who specializes in the stock of locally based companies, said he also believes there often is an unstated reason for stock repurchases. “The management gets personally insulted that the stock has sunk so low and they think that by issuing a buy-back notice they are showing the world that their stock is underpriced and that they are backing up that belief with the company’s own money.”

If US Facilities moves ahead with the repurchase--and several brokers said that about half of all so-called buy-back plans are never completed--it would acquire the shares both in private sales and on the Nasdaq over-the-counter market, where the stock is traded.

The repurchase plan, approved by the company’s board of directors, “underscores the board’s current view that the marketplace is not reflective of the long-term confidence we hold for the future of our company,” said George Kadonada, US Facilities’ chairman and chief executive officer.

US Facilities sells and underwrites medical stop-loss insurance, provides managed care and medical bill review products and writes policies that help property and casualty insurers cover any losses they experience.