Commonwealth Bank steps forward as notable ally in Rinehart Fairfax venture

FUNDS managers under the Commonwealth Bank's umbrella are the first to identify themselves as significant sellers of Fairfax Media shares to the mining magnate Gina Rinehart.

By InvestSMART · 21 Jun 2012

By InvestSMART ·
21 Jun 2012

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FUNDS managers under the Commonwealth Bank's umbrella are the first to identify themselves as significant sellers of Fairfax Media shares to the mining magnate Gina Rinehart.

A substantial shareholding notice filed yesterday by CBA disclosed that they had sold more than 55 million shares on Thursday and Friday last week when brokers acting for Mrs Rinehart were increasing her holding to 18.67 per cent of Fairfax.

The net reduction in its shareholding since the last time it made a statement in early February, was a smaller number of shares, because some funds had also bought shares in the interim.

That February notice from CBA was also about a reduction in its holdings, and in part stemmed from selling shares to Mrs Rinehart's Hancock Prospecting group.

Overall, holdings in Fairfax attributable to funds under CBA's control, most of them within the Colonial First State group, fell from 11.04 per cent to 8.88 per cent of the media group.

CBA's notice includes a paragraph of fine print pointing out that 1.4 percentage points of that Fairfax stake are managed by external groups that take their own decisions on buying and selling stocks.

In 2009 Mrs Rinehart won the Commonwealth Bank Business Owner Award, a subset of the Telstra Business Women's Awards which she also won that year.

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Frequently Asked Questions about this Article…

What did Commonwealth Bank (CBA) funds do with their Fairfax Media shares?

Funds under the Commonwealth Bank umbrella identified themselves as significant sellers of Fairfax Media shares, disclosing they sold more than 55 million Fairfax shares when brokers acting for Gina Rinehart were increasing her stake.

How many Fairfax shares did CBA-managed funds sell and when were they sold?

CBA's substantial shareholding notice said the funds sold more than 55 million Fairfax shares on a Thursday and Friday last week, according to the filing referenced in the article.

How did those sales change CBA-related holdings in Fairfax Media?

Overall holdings in Fairfax attributable to funds under CBA's control fell from 11.04% to 8.88% of the media group after the sales disclosed in the notice.

What happened to Gina Rinehart's stake in Fairfax as a result of these trades?

Brokers acting for Gina Rinehart were increasing her holding in Fairfax to 18.67%, and CBA funds were among the sellers that helped facilitate that increase.

Did CBA previously sell Fairfax shares to Gina Rinehart's group?

Yes. The article notes a February notice from CBA about a reduction in holdings that partly stemmed from selling shares to Mrs Rinehart's Hancock Prospecting group.

Are all Fairfax shares attributed to CBA managed directly by the bank?

No. CBA's notice pointed out that about 1.4 percentage points of the Fairfax stake are managed by external groups, which make their own decisions on buying and selling stocks.

What should everyday investors watch for when institutional ownership in a stock changes?

As illustrated by the CBA–Rinehart transactions, everyday investors should monitor substantial shareholding notices and changes in institutional ownership because they reveal who is buying or selling significant blocks of stock and can have governance or liquidity implications.

Is there any other connection between Gina Rinehart and the Commonwealth Bank mentioned in the article?

Yes. The article mentions that in 2009 Gina Rinehart won the Commonwealth Bank Business Owner Award, part of the Telstra Business Women's Awards, which she also won that year.