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:

Bapcor Ltd (ASX: BAP)

According to a notice of initial substantial holder, Paradice Investment Management has been buying this autoparts retail company’s shares. The notice shows that Paradice has been buying Bapcor’s shares all year, but stepped up the purchases during the market crash. The investment manager now owns 16,486,120 shares, which equates to a 5.047% stake in the company. With its shares down materially from their 52-week high, it appears as though Paradice sees a lot of value in them at current levels. One broker that agrees with this view is Citi. Earlier this month it slapped a buy rating and $6.00 price target on the company’s shares. The broker believes its expansion into Thailand could surprise to the upside.

Citadel Group Ltd (ASX: CGL)

According to a change of interests of substantial holder notice, Perennial Value Management has been increasing its stake in this information management company. The notice reveals that Perennial has picked up approximately 1.4 million shares over the last few weeks to lift its holding to a total of 6,173,004 shares. This means the fund manager now owns a 7.84% stake in the company. Although Citadel’s shares have rebounded strongly from their March lows, they are still trading 53% lower than their 52-week high. Judging by its investments, Perennial appears to believe Citadel will navigate the pandemic just fine. It must also have faith in management’s decision to acquire UK healthcare software company Wellbeing for $200 million.

More reading

• 3 ASX 200 pandemic winners and 3 losers
• 2 bargain ASX shares to buy with $2,000
• Here are all the ASX 200 companies that have announced capital raisings so far in 2020
• Leading brokers name 3 ASX 200 shares to buy today
• 3 ASX shares that are absurdly cheap right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended Citadel Group Ltd. 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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Warren Buffett is usually regarded as the best share market investor of all time. He has managed to build a fortune of over US$67 billion over his long career by investing prudently in the best companies in America through his holding company Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). So it goes without saying that when it comes to the topic of investing, Buffett is someone we can all look up to.

Our Foolish colleagues over in the US have a comprehensive list of some of Buffett’s best quotes. Here are three to start off your week!

“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”

Here Buffett is touting the benefits of being a ‘contrarian’ investor. If you truly want to outperform the S&P/ASX 200 Index (ASX: XJO) over time (which is what most ASX investors strive for), you need to be willing to make bets against what most investors are expecting. But you also need to be comfortable in your own decisions and not unnecessarily opposed to what the market is pricing. It’s the emotional side of investing that undoes many investors, and this is what Buffett is really warning against here.

“The worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worth less over time. But good businesses are going to become worth more over time.”

With this quote, Buffett neatly sums up why everyone should invest over the long-term. It’s true that cash is the safest place to store your wealth – but only in the short term. In the long-run, one of the few certainties of investing dictates that cash is a terrible store of value. Governments actually aim to reduce the real value of our dollars over time with their inflation targets. That’s why carefully investing in businesses; shares, is the best way to build long-term wealth, with perhaps a little cash on the sides.

“Buy into a company because you want to own it, not because you want the stock to go up.”

This is such a pithy way of summing up our own Foolish investing philosophy. Investing is about merging your interests with that of a business that you think will succeed in generating wealth over the long-term. It’s not about trading different ticker symbols on a screen. Buffett himself owns shares in Coca-Cola, but he also famously loves drinking Coke himself. Loving a company’s products and investing in said company because of your passion for their business (provided you’ve made sure it’s a great company) is a great way to find winners and feel good about it, too!

More reading

• How is the ASX 200 soaring despite rising unemployment?
• Is it time to buy ASX 200 gold shares?
• The 5 ASX shares that were last week’s biggest fallers
• Is the Mirvac share price about to soar?
• ASX 200 up 1.35%: Gold miners and Fortescue rocket higher, big four banks tumble

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). 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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