Fund managers have been buying these ASX shares

Fund managers have been buying Bapcor Ltd (ASX:BAP) and this ASX share this month. Here's what you need to know…

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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:

Bapcor Ltd (ASX: BAP)

According to a notice of initial substantial holder, Paradice Investment Management has been buying this autoparts retail company's shares. The notice shows that Paradice has been buying Bapcor's shares all year, but stepped up the purchases during the market crash. The investment manager now owns 16,486,120 shares, which equates to a 5.047% stake in the company. With its shares down materially from their 52-week high, it appears as though Paradice sees a lot of value in them at current levels. One broker that agrees with this view is Citi. Earlier this month it slapped a buy rating and $6.00 price target on the company's shares. The broker believes its expansion into Thailand could surprise to the upside.

Citadel Group Ltd (ASX: CGL)

According to a change of interests of substantial holder notice, Perennial Value Management has been increasing its stake in this information management company. The notice reveals that Perennial has picked up approximately 1.4 million shares over the last few weeks to lift its holding to a total of 6,173,004 shares. This means the fund manager now owns a 7.84% stake in the company. Although Citadel's shares have rebounded strongly from their March lows, they are still trading 53% lower than their 52-week high. Judging by its investments, Perennial appears to believe Citadel will navigate the pandemic just fine. It must also have faith in management's decision to acquire UK healthcare software company Wellbeing for $200 million.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended Citadel Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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