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 week ended 13 April 2018. They are: Venture Corporation Ltd (SGX: V03), Oversea-Chinese Banking Corp Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11),
Source: Singapore Exchange; SGX Stock Facts
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.
Venture remains as one of the most sought-after companies by institutional investors. In March, the company had the highest net purchases by dollar value amongst institutional investors at S$131.2 million. Despite heavy buying interest from institutional investors, Venture’s stock price today is down by over 20% from a month ago.
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.”
The next two companies will need little introduction since both of them are amongst the three local banks in Singapore.
OCBC’s latest earnings update was also for 2017’s fourth quarter. The bank had a good quarter, as its net profit jumped by 31% year-on-year to S$1.03 billion, and its book value per share stepped up by 5.5% to S$8.96.
In OCBC’s latest earnings update, CEO Samuel Tsien said that “apart from the stress in the offshore oil and gas support services portfolio, the credit quality of the [bank’s] overall loan portfolio remained sound.” Tsien also mentioned that there’s “renewed optimism” in OCBC’s key markets.
As for UOB, its 2017 fourth quarter performance was strong too. Its net profit for the quarter climbed by 15.7% to S$855 million, and its book value per share was up by 8.2% to S$20.37. In UOB’s earnings update, the bank’s CEO and deputy chairman, Wee Ee Cheong, gave some comments that summarised the reporting quarter and year:
“We are pleased to have ended 2017 with record profits, as our core businesses drove both net interest income and fees to new highs.
Despite headwinds in the last couple of years, particularly in the oil and gas sector, our balance sheet remains strong, with robust capitalisation and reserves buffer as well as ample liquidity. Coupled with our steady earnings growth momentum, we are able to reward our shareholders with an increase in core dividend to 80 cents per ordinary share, and a special dividend of 20 cents for 2017.”
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. Motley Fool has recommendations for United Overseas Bank Ltd and DBS Group Holding Ltd.