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:
NEXTDC Ltd (ASX: NXT)
A notice reveals that Yarra Capital Management became a substantial holder of this data centre operator on February 10. According to the notice, the active and independent fund manager now owns 17,493,666 shares in NEXTDC, which means that it has a stake of just over 5%. The fund manager, and the market in general, appear confident that NEXTDC is well-positioned for strong long term growth thanks to its exposure to the cloud computing boom. So much so, on Friday the company's shares have hit a 52-week high of $7.90. Yarra Capital's portfolios are built around high-conviction ideas drawn from its own fundamental, proprietary research. NEXTDC appears to tick its boxes.
SKYCITY Entertainment Group Limited (ASX: SKC)
A change of substantial holder notice reveals that Commonwealth Bank of Australia (ASX: CBA) has been topping up its position in this casino and resort operator. According to the notice, the banking giant has increased its holding by ~7.4 million shares to a total of 54.45 million shares. This means CBA's stake now stands at just short of 8.2%. Earlier this month the SKYCITY share price tumbled to a 52-week low of $3.38. The bank's equity analysts appear to believe this was a buying opportunity.
