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:

Mayne Pharma Group Ltd (ASX: MYX)

According to a notice of initial substantial holder, Lazard Asset Management Pacific Co. has been buying this pharmaceutical company’s shares over the last three months. It picked up its first parcel of shares at the end of February and made its most recent purchase on Thursday with a ~$890,000 investment. This final purchase took its holding to a total of 84,379,755 shares, which represents a 5.03% stake in the company.

Mayne Pharma’s shares have fallen heavily over the last few years due to incredibly tough trading conditions in the generic drugs market. Lazard may believe the company is over the worst of it now and could return to growth in the near future.

Megaport Ltd (ASX: MP1)

Another notice of initial substantial holder reveals that Commonwealth Bank of Australia (ASX: CBA) has become a substantial holder of this elasticity connectivity and network services provider. The banking giant and its subsidiaries have been building a position over the last few months and now own a total of 7,811,384 shares. This equates to a 5.1% stake in the company.

Megaport’s shares have been on fire over the last 12 months thanks to its explosive recurring revenue growth. This has led to them generating a return of over 130% for shareholders. Judging by its purchases, Commonwealth Bank appears to believe there are more strong returns to come in the future.  

More reading

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• 2 ASX 200 dividend shares to buy for income in 2021

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Dollar-cost averaging (DCA) is an investing strategy commonly prescribed for the ‘average’ investor on the street. It involves putting a consistent amount of money into an ASX share or portfolio of shares at a consistent interval over time (e.g. $100 a week), with no regard to the underlying price. In this way, you can get an averaged price without having to worry about timing the right entry point, which can be an emotionally fraught exercise.

Of course, this only works if you have a quality company that rises in value over time. Anyone who tried dollar-cost averaging into say AMP Limited (ASX: AMP) over the last decade would have been throwing money away.

So with that in mind, here are 3 ASX shares that I think are perfect for a DCA strategy.

Vanguard Australian Shares Index ETF (ASX: VAS)

This exchange-traded fund (ETF) is perfect for a DCA strategy. That’s because it holds not 1, but 300 of the largest companies on the ASX. It’s impossible to figure out whether an index fund like VAS is truly overvalued or undervalued at any one point, because you would have to do pricing analysis on all 300 companies.

Thus, a far easier way of successfully investing in a basket of companies like this would be to employ DCA. Losing companies are eventually weeded out and rising stars are added to over time. Index funds like VAS have historically always risen and made new highs (despite some volatility in between), and therefore I think this type of investment will serve you well under a DCA strategy.

Washington H. Soul Pattinson & Co Ltd (ASX: SOL)

‘Soul Patts’ is a company that acts as an investor in its own right. It does so by buying other ASX shares and building its own investment portfolio outside its old core business of operating pharmacies. Today, Soul Patts has large stakes in a diverse range of Aussie companies, including TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC) and BKI Investment Co Ltd (ASX: BKI).

Thus, I think this company is a great alternative to an ASX index fund like VAS – which some investors might not like due to the heavy exposure to ASX banks and miners. It has a proud history of growth, including an unbeatable 20-year streak of increasing its dividends. As such, I think it’s a great company to employ a DCA strategy into.

More reading

• 2 quality ASX shares to buy for long-term growth
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• My ASX share for the week
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Motley Fool contributor Sebastian Bowen owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The National Australia Bank Ltd. (ASX: NAB) share price closed today’s trade at $15.75.

Sure, this share price isn’t quite as low as the levels we saw in March when NAB shares reached $13.20. But it’s still not far from a level that, until March, we hadn’t seen this century. That’s right, you have to go back to 1996 to find a time when NAB shares plumbed the depths they found 2 months ago.

Even during the global financial crisis, which hit bank shares particularly harshly, NAB shares didn’t see a share price with a 13 at the beginning.

So we already know this ASX bank has been a lousy investment over the past two and a half decades, even with the healthy dividends NAB used to pay. It’s not often you can say you bought a company that went backwards over 25 years.

But it’s still one of the largest companies in Australia, has a virtual government guarantee and a formidable market share in the ASX financials sector.

So is the NAB share price in the buy zone today?

Are NAB shares in the bargain bin?

Well, the first thing to note is that no one should be expecting much in the way of dividend payments in 2020.

Yes, unlike NAB’s compatriots Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Limited (ASX: ANZ), NAB will be paying a 30 cents per share interim dividend in July.

But NAB’s past payments make this look like a pittance. Shareholders were treated to an annual dividend of $1.98 per share in 2018. Last year, investors received $1.66 per share in payments. This year, it looks as though NAB shareholders will be lucky to receive 60 cents per share. That’s a 66.7% cut over 2 years – although I’m not blaming NAB entirely for this, due to the impacts of the coronavirus on the economy.

Still, if an investor bought in at the current NAB share price, this new dividend would translate into an annualised yield of 3.8%, which isn’t really anything to write home about.

However, these dividends are likely to recover somewhat over time. It’s hard to say how much though – that depends on consumers returning to the credit markets in the months and years ahead, as well as what interest rates end up doing.

One investor who’s bullish on NAB shares is Nab’s own CEO, Ross McEwan. Mr McEwan recently picked up 47,500 shares worth around $731,500 (at the time) earlier this month. It’s always nice seeing a CEO put their money where their mouth is.

Foolish takeaway

In time, I think the NAB share price will recover from the lows we see today. However, I’m not in a rush to add to my existing NAB shares alongside Mr McEwan, even at these depths. There’s a lot of uncertainty in the future of the ASX banks, and I’m not confident that the heavy headwinds the sector is facing have a clear end in sight. Thus, I think there are better places to put your money in this market.

More reading

• These are the latest ASX shares to be upgraded by brokers to buy
• ASX 200 up 1.7%: Flight Centre and Webjet rocket, Afterpay hits record high
• ASX 200 Weekly Wrap: ASX rallies on mining highs
• Where to invest $5,000 in ASX 200 shares immediately
• Is the NAB share price a buy today?

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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