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:
Kogan.com Ltd (ASX: KGN)
A change of substantial holder notice reveals that annuities company Challenger Ltd (ASX: CGF) has taken advantage of this ecommerce company's recent share price weakness to add to its holding. According to the notice, Challenger has bought almost 1 million Kogan shares, lifting its stake to a total of 7,242,229 shares or 7.65% of its outstanding shares. The Kogan share price has fallen heavily since the release of its half year results. Those results revealed a sharp slowdown in its growth in the latter part of the first half. But judging by its purchases, Challenger appears to believe its shares were oversold and are now at an attractive level.
Zip Co Ltd (ASX: Z1P)
An initial substantial holder notice reveals that Regal Funds Management has become a substantial holder of this leading buy now pay later provider. According to the notice, Regal Funds has been building up its position since November and now has 19,645,264 Zip Co shares. This is the equivalent of a 5.03% stake in the company. Regal Funds is a specialist alternative investment manager which services a wide range of institutional investors, family offices, and high net worth individuals. The Zip Co share price is down materially in 2020 amid the market volatility. In afternoon trade it is changing hands at $2.59, compared to its 52-week high of $5.86.
