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:
Praemium Ltd (ASX: PPS)
A substantial holder notice notice reveals that Milford Asset Management has been buying the shares of this investment platform provider. According to the release, the asset manager has become a substantial holder after increasing its holding to 20,748,075 shares. This is the equivalent of 5.081% of its outstanding shares.
The Praemium share price has thoroughly underperformed over the last 12 months and appears to be trading at an attractive level for this fund manager. Milford Asset Management has an active management approach. It aims to engage with companies and influence their policies to drive positive change. In 2019 its Australian Absolute Growth Fund returned 19.4%.
Redbubble Ltd (ASX: RBL)
Perennial Value Management has taken advantage of this ecommerce company's recent share price weakness to almost double its holding. According to a change of interests of substantial holder notice, the active investment management firm has picked up ~11.9 million Redbubble shares over the last few weeks. This increased Perennial Value Management's holding to ~25.3 million shares and lifted its stake to 9.73%.
The Redbubble share price fell heavily just before Christmas after a surprisingly bad trading update. That update revealed that the Redbubble branded marketplace has underperformed expectations due to an increase in price competition in its market leading sticker position. Judging by its purchase, Perennial Value Management appears confident this is just a temporary blip and a return to form is around the corner.
