I've been keeping a close eye on what substantial shareholders have been doing recently. Especially following the market selloff.
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:
EML Payments Ltd (ASX: EML)
A change of interests of substantial holder notice reveals that Greencape Capital has taken advantage of a recent pullback in this payments company's shares to top up its position. Between March 4 and March 19 Greencape Capital picked up a total of 4,123,095 shares through on market trades. This lifted its holding to a total of 24,526,506 shares, which represents a 7.54% interest.
Greencape Capital is a specialist Australian equities fund manager based in Melbourne. As of the end of December 2019, its High Conviction Fund had generated a return of 28.6% over the previous 12 months. This afternoon the EML Payments share price is trading within a whisker of a 52-week low of $1.20. This compares to its 52-week high of $5.70. Greencape Capital appears to believe this is bargain territory.
Vocus Group Ltd (ASX: VOC)
Greencape Capital has also been increasing its holding in this telco company this month. A change of interests of substantial holder notice reveals that it has increased its holding in the company from 42,104,971 shares to 49,523,601 shares. This represents an interest of 7.98%.
Once again, the fund manager appears to have been taking advantage of a sharp decline in Vocus' share price. Earlier today the company's shares hit a multi-year low of $1.81. It appears as though the fund manager sees a lot of value in them at this level.
