There are many ways to find investment ideas. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue. Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they…
There are many ways to find investment ideas. Some useful ways are to screen for stocks or to look at a list of stocks near their 52-week lows to sieve out potential bargains. Studying what institutional investors have been buying or selling is another avenue.
Institutional investors are typically large investment organisations, such as hedge funds, mutual funds, unit trust companies, sovereign wealth funds, insurance companies and so on. These investors tend to possess vastly greater resources than individual investors like you and me when researching stocks. Hence, it may be useful to keep a close eye on what they are doing, as a way to generate ideas.
In this article, I will look at three Singapore stocks that have seen the highest net purchases in dollar value by institutional investors for the month of March 2018. They are: Venture Corporation Ltd (SGX: V03), Best World International Limited (SGX: CGN), and Singapore Technologies Engineering Ltd (SGX: S63).
Source: Singapore Exchange; S&P Global Market Intelligence
Venture is an electronics manufacturing services provider with expertise in a wide range of activities that include printing & imaging, networking & communications, retail store solutions & industrial, computer peripherals & data storage, and others.
In its latest earnings update, which was for the fourth quarter of 2017, Venture reported a 27.1% year-on-year increase in revenue to S$1.09 billion. The company’s bottom-line performance was even stronger, as its profit attributable to shareholders surged by 164.5% to S$143.0 million. Looking ahead, Venture said in its latest earnings update that its business environment “may remain volatile.” However, the company “remains confident that it is well placed to create significant value for the benefit of its partners.”
Best World is a direct-selling company that deals with a wide range of healthcare products. The company makes money through direct sales, export sales, and wholesale activity.
Over the last 12 months, Best World has seen its stock price climb by over 40%. There can be many reasons behind this increase, but it is likely that the improvement in the company’s financial performance had played a big role.
In 2017, Best World’s revenue improved by 10.0% to S$ 220.9 million on the back of sales growth in China. The company’s net profit attributable to shareholders did even better, jumping by 61.0% to S$55.7 million, mainly driven by higher sales revenue and lower distribution costs.
In term of its outlook, this is what the company said in its earnings update:
“Moving forward, we have several initiatives being lined up; such as the change in business model from Export Segment to Direct Selling and the expansion of our direct selling coverage in China. With a result oriented and motivated team, we believe that this is the beginning of a new growth era for us.”
ST Engineering is one of the Singapore market’s largest conglomerates. It has four main business segments: Aerospace, Electronics, Land Systems, and Marine.
The fourth quarter of 2017, which was the reporting period for ST Engineering’s latest earnings update, was not the best for the conglomerate. Its revenue for the reporting quarter was S$1.70 billion, down 6% from 2016’s fourth quarter. Moreover, its net profit was flat at S$168.5 million. But, the future looks brighter for ST Engineering. The company’s order book at end-2017 was S$13.2 billion, 14% higher than at end-2016. It also said the following in its latest 2017 annual report:
“Our defence business remains core to us and we continue to strengthen and deepen the business and capabilities.
Our participation in highly contested global defence programmes has helped enhance our reputation as a competitive defence business participant with advanced technologies and solutions that meet the needs and requirements of modern military and paramilitary forces.
With improving global economics and stronger focus on defence and homeland security globally, we are hopeful to gain a larger share of defence and related spending, predicated on a superior value proposition and international track record.”
In other words, the company is optimistic that its defence business will be able to grow, and continue to remain a core business.
Looking at what institutional investors are doing could be a useful tool in your toolkit when sourcing for investment ideas. But do note that the information presented here is by no means a recommendation to take any action on the stocks mentioned. Instead, it should be viewed only as a useful starting point for further research.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.