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 (among the top ten stocks) that have seen the highest net purchases in dollar value by institutional investors in for the week ended 29 June 2018. They are: United Overseas Bank Ltd (SGX: U11), Venture Corporation Ltd (SGX: V03) and CapitaLand Mall Trust (SGX: C38U).
Source: Singapore Exchange; SGX Stock Facts (as of 29 June 2018)
The first company on the most bought stocks list is our local bank UOB.
UOB has remained the most purchased stock by institutional investors for the last two weeks. Though many reasons could have contributed towards the high interest, we think UOB latest strong performance would be one of them. Here are some numbers to provide some context:
UOB’s total income grew 9% year-on-year to S$ 2.23 billion, of which net interest income jumped 13% year-on-year to S$1.47 billion whilst net fees and commission income grew 18% year-on-year to S$0.5 billion. This performance resulted in a 7% year-on-year increase in operating profit to S$ 1.24 billion. Net profit jumped by 21% year-on-year to S$0.98 billion.
Commenting on the Group’s outlook, CEO Mr Wee Ee Cheong said:
“We continue to invest in our core franchise, riding on the growing digital connectivity in the region to enhance the customer experience for consumers and businesses. For example, we are the first regional bank to establish a joint venture to provide a next-generation digital credit assessment solution to make it smarter and faster for companies to extend credit to underserved customers across ASEAN.
Despite ongoing trade tensions and financial market volatilities, we are confident of Asia’s economic fundamentals and growth potential which continue to present immense opportunities given rising urbanisation, affluence and business flows. As a long-term player with an extensive footprint and connectivity in the region, UOB is well-placed to meet our customers’ growth needs.”
The next company Venture Corporation is an electronics manufacturing services provider with expertise in a wide range of activities.
Similar to UOB, Venture Corporation has recently announced a rather strong quarterly earnings update. For the quarter ended 31 March 2018, revenue was up by 1.5% year-on-year to S$856.0 million. Similarly, profit attributable to shareholders was up by 72.2% year-on-year to S$83.7 million. As a result, Venture’s diluted earnings per share (EPS) was up by 67.4% year-on-year to 28.8 cents.
The company also ended the quarter with a strong balance sheet. As at 31 March 2018, the company had S$765.3 million in cash on the balance sheet and S$40.7 million in debt. This combination gives Venture Corporation a net cash position of S$ 724.6 million, up from S$ 399.6 million as at 31 March 2017.
As for its outlook, this is what the company shared in its earnings update:
“In spite of the weakened US dollar and heightened uncertainty due to geo-political environment, the Group managed to report set of results in the first quarter of 2018. a creditable
The Group remains steadfast in execution along several key initiatives. Venture continues to leverage its core capabilities in engineering, advanced manufacturing and supply chain management to drive operational excellence and deep value creation. Venture plans to grow its pool of strategic partnerships and its technological diversity with expansion into new and adjacent ecosystems. Excellent execution of these ongoing and new initiatives will support the Group’s endeavor to build sustainable growth and performance.”
The last company on the institutional investors most bought list Capitaland Mall Trust or CMT. As a quick introduction, CMT is a REIT that focuses on investing in income producing real estate, which are used for retail purposes.
The REIT currently has 16 properties, which are located in the suburban areas and downtown core of Singapore. Example of properties includes Tampines Mall, Junction 8, Funan, IMM Building, Plaza Singapura, Bugis Junction and others.
In the latest quarter ended 31 March 2018, CMT reported that its gross revenue was up 1.8% year-on-year to S$175.2 million. Similarly, net property income grew 4.7% year-on-year to S$125.7 million. The year-on-year improvement in gross revenue and NPI (net property income) was due to “the increase was mainly due to higher occupancy for IMM Building, Clarke Quay, The Atrium@Orchard and Plaza Singapura as well as higher car park income.”
As a result, distribution per unit grew 1.8% year-on-year to 2.78 cents. As at 31 March 2018, the retail REIT had a gearing ratio of 33.5% while its occupancy rate stood at 98.9%.
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 DBS Group Holdings Ltd, United Overseas Bank Ltd, and CapitaLand Mall Trust.