I've been keeping a close eye on what substantial shareholders have been doing recently. Especially following the market crash.
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 so-called smart money is going.
Two notices that have caught my eye are summarised below:
Carsales.Com Ltd (ASX: CAR)
A notice of initial substantial holder shows that First State Super has been buying this auto listings company's shares. According to the notice, the fund manager now owns a total of 12,345,215 shares. This is the equivalent of 5.04% of Carsales' outstanding shares.
First State Super appears to believe the company's shares are trading at an attractive level after they lost a third of their value since the start of the year. Investors have been selling its shares due to concerns over the state of the new and used car markets during the coronavirus crisis. Last month Carsales withdrew its guidance for FY 2020 due to the continued uncertainty in Australian market conditions.
Kathmandu Holdings Ltd (ASX: KMD)
Another notice of initial substantial holder reveals that AMP Limited (ASX: AMP) has taken advantage of a sharp pullback in this adventure retailer's shares to pick up shares. According to the notice, AMP became a substantial holder on April 3 through the ownership of 16,348,989 shares. This equates to 5.54% of Kathmandu's total shares outstanding.
Last month the retailer's shares fell to an all-time low of 44 cents amid concerns over its liquidity during the coronavirus pandemic. It has since successfully completed a NZ$154 million institutional placement and entitlement offer. These funds were raised at a discount of just 49 Australian cents per share. Judging by its purchases, AMP appears to believe the company is well-placed to ride out the storm following this equity raising.
