I think it is well worth keeping a close eye on what substantial shareholders are doing.
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 meaningful changes to their holdings.
I feel investors should look to use these notices to their advantage. After all, they give investors an idea of where the smart money is going.
Two notices that have caught my eye are summarised below:
ARB Corporation Limited (ASX: ARB)
According to a change of interests of substantial holder notice, Bennelong Australian Equity Partners has been topping up its position in this four-wheel drive vehicle accessories company. The notice reveals that Bennelong has bought 1,052,952 shares on-market over the last couple of months.
The fund manager clearly took advantage of its share price weakness during the market crash (to good effect) and was able to buy as low as $13.26. The company's shares are now trading above $17.00. These purchases took Bennelong's holding to a total of 6,821,451 shares, which equates to an 8.55% stake.
Charter Hall Group (ASX: CHC)
A change of interests of substantial holder notice reveals that Commonwealth Bank of Australia (ASX: CBA) has increased its stake in this property company. According to the notice, the banking giant has lifted its holding in Charter Hall by ~4.7 million shares to a total of 37,363,414 shares. This means the bank now has an 8% interest in the company.
It appears as though Commonwealth Bank believes that Charter Hall's shares have been oversold during the market crash. Even after a strong recovery over the last couple of months, the property developer's shares are still down by almost a third from their 52-week high.
