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Institutional Investors Have Been Selling These 3 Stocks

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 sales in dollar value by institutional investors for the week ended 13 April 2018. They are: Singapore Telecommunications Limited (SGX: Z74), City Developments Limited (SGX: C09), and Singapore Airlines Ltd (SGX: C6L).

Source: Singapore Exchange; SGX Stock Facts

Singapore Telecommunications is an easily recognisable company in Singapore, given that it’s our island nation’s largest operational telco.

In its latest earnings update, which was for the third quarter of its fiscal year ended 31 March 2018 (the reporting period was from 1 October 2017 to 31 December 2017), Singtel reported a 4.4% year-on-year increase in revenue to S$4.60 billion. Yet, the company’s profit attributable to shareholders declined by 8.5% to S$890.2 million.

Regarding Singtel’s future, here are some comments from the telco’s CEO, Chua Sock Koong, given in the latest earnings update:

“Despite the current business headwinds, our regional associates’ markets remain attractive with strong mobile data growth. The ongoing consolidation in India will also pave the way for a healthier industry. We believe our associates’ investments in networks and spectrum, strategic partnerships and focus on innovation will pay off. We continue to work closely with them to drive digital adoption, and mobile data growth in their markets.”

Property developer and investor, City Developments, is the next company in line. Its latest earnings update is also for the last quarter of 2017. In the quarter, City Developments experienced a 13.8% year-on-year increase in revenue to S$1.33 billion. But, its profit attributable to shareholders actually fell by 23.4% to S$186.7 million.

Kwek Leng Beng, the executive chairman of City Developments, shared the following comments on the company’s growth plans in the earnings update:

“After a challenging four-year period, there is a boost in sentiment for the Singapore residential market, with increased sales volume and prices. To drive growth, we will look to our property development business, particularly in Singapore where the upturn in the property cycle is only just beginning.

Singapore is a market we know intimately well, having operated here for over 50 years. We are well-poised to ride the upturn with around 2,750 residential units in the pipeline across the mass, mid- and high-end segments. CDL will continue to be highly disciplined and selective in making strategic bids.

For our hospitality business, we will prudently expedite the refurbishment of M&C’s portfolio which is a key contributor to our recurring income.”

The aptly named airline company, Singapore Airlines Ltd, is third on the list.

In the third quarter of its fiscal year ended 31 March 2018 (FY2018), SIA reported a profit attributable to shareholders of S$286.1 million, 61.5% higher than a year ago. This came on the back of a 6% increase in revenue to S$4.08 billion.

Singapore Airlines had given some useful comments on its outlook in its earnings update:

“Despite a stabilisation in yields in recent months, pressure on yields remains as competitors mount significant capacity in key markets with aggressive pricing. These challenging market conditions have been exacerbated by recent fuel price movements.

The Group’s three-year transformation programme is well on track, with initiatives already bearing fruit in terms of enhancement of customer experience, revenue generation and improvements in operational efficiency. New initiatives are being actively explored. Digital innovation is an important enabler of the transformation programme, with significant investments being made to lift the Group’s digital capabilities.

Through the various key strategic initiatives and strength of the portfolio of airlines serving both full-service and low-cost market segments, the SIA Group is well positioned to meet the ongoing competitive challenges.”

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.