I've been keeping a close eye on what substantial shareholders have been doing recently.
Substantial shareholders are shareholders that hold 5% or more of a company's shares. These tend to be large investors, asset managers, and investment funds. These shareholders are obliged to update the market when they make any changes to their holdings.
As a result, I feel investors should look to use these notices to their advantage. After all, they show where the "smart money" is going.
Two notices that have caught my eye are summarised below:
Altium Limited (ASX: ALU)
A notice out of Commonwealth Bank of Australia (ASX: CBA) reveals that it has been buying the shares of this electronic design software company. According to the release, Australia's largest bank has become a substantial holder of Altium's shares after increasing its interest to 6,562,143 shares. This equates to approximately ~5.01% of its shares outstanding. Judging by its investment, Commonwealth Bank appears confident that Altium will achieve its aspirational revenue target of US$500 million by FY 2025. This compares to its guidance of US$205 million to US$215 million in FY 2020.
Reject Shop Ltd (ASX: TRS)
A change of interests of substantial holder notice reveals that Grahger Retail Securities has been adding to its position in this discount retailer. Grahger Retail Securities only became a substantial holder in Reject Shop a couple of weeks ago, but has continued its buying spree. Since December 20 the investment company has added a further ~350,000 shares to its holding, lifting its stake to approximately 1.98 million shares. This equates to ~6.8% of the company's outstanding shares. The Reject Shop share price has rocketed 77% higher since this time last month. But judging by its purchases, Grahger Retail Securities appears to believe it can still go higher from here.
