I think it is well worth keeping an eye on what substantial shareholders of companies do.
A substantial shareholder is a shareholder that owns 5% or more of a company's shares. These are often large investors, asset managers, and investment funds.
ASX rules mean that these shareholders are obliged to provide substantial holding notices relating to movements above or below the threshold, and any change of 1% or more.
As a result, I think investors should 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:
Boral Limited (ASX: BLD)
A notice of initial substantial holder reveals that Seven Group Holdings Ltd (ASX: SVW) has been buying this building products company's shares. Over the last three months the investment company has built up a holding of 122,565,694 Boral shares. This means it now has a 10% stake in the company.
Seven Group, which has a number of investments in the construction industry, started picking up shares after they fell heavily during the market crash. Though, it has been buying them as recently as on Tuesday. Boral's shares are still down over 37% from their 52-week high. This appears to be a level which Seven Group believes is good value.
Marley Spoon AG (ASX: MMM)
According to a change of interests of substantial holder notice, Perennial Value Management has continued to increase its stake in this meal kit delivery company. The notice reveals that over the last three weeks the fund manager has picked up almost 6 million Marley Spoon shares through on-market trades. This has increased its holding in the company from approximately 16.3 million shares, to ~22.2 million shares. This represents a 12.7% stake in the company.
In April Marley Spoon revealed that it experienced a surge in demand for its meal kit subscriptions because of lockdowns and restaurant closures. Time will tell whether these new customers will be retained when restrictions lift, but Perennial Value Management appears confident they will.
