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:
Mayne Pharma Group Ltd (ASX: MYX)
According to a notice of initial substantial holder, Lazard Asset Management Pacific Co. has been buying this pharmaceutical company's shares over the last three months. It picked up its first parcel of shares at the end of February and made its most recent purchase on Thursday with a ~$890,000 investment. This final purchase took its holding to a total of 84,379,755 shares, which represents a 5.03% stake in the company.
Mayne Pharma's shares have fallen heavily over the last few years due to incredibly tough trading conditions in the generic drugs market. Lazard may believe the company is over the worst of it now and could return to growth in the near future.
Megaport Ltd (ASX: MP1)
Another notice of initial substantial holder reveals that Commonwealth Bank of Australia (ASX: CBA) has become a substantial holder of this elasticity connectivity and network services provider. The banking giant and its subsidiaries have been building a position over the last few months and now own a total of 7,811,384 shares. This equates to a 5.1% stake in the company.
Megaport's shares have been on fire over the last 12 months thanks to its explosive recurring revenue growth. This has led to them generating a return of over 130% for shareholders. Judging by its purchases, Commonwealth Bank appears to believe there are more strong returns to come in the future.
