Korean Preference Shares

Ori Eyal presented his in-depth investment thesis on Korean Preference Shares at Best Ideas 2016.

Korean Preference Shares: Ori recommends investing in a group of carefully selected Korean preference shares which trade, on average, at a ~50% price discount to their respective common stocks. Korean preference shares are a form of equity security and are materially equivalent to Korean common stocks. They are legally entitled to a higher dividend and have a legal claim on company assets, earnings, and cash flows. Their lack of voting rights justifies a price discount of 10-20% but cannot justify the large discounts at which they trade. Multiple catalysts are already causing this price discount to gradually narrow. These include mean reversion, capital inflows into Korea, rising dividend yields, improved corporate governance, and bargain-hunting value investors. Potential preference share investment opportunities in Korea include Lotte Chilsung Beverage (leading Korean beverage company), LG Health and Household (leading Korean consumer goods company), Kolon Industries, Daelim Industrials, Daesang Corp, and CJ Corp.

About the instructor:

Ori Eyal is Founder and Portfolio Manager of Emerging Value Capital Management, a long-short global value fund. The firm’s in-depth research explores the merits of each investment in the context of a global market. Ori worked at Deutsche Bank Asset Management, Deephaven Capital Management and Aquamarine Fund. He holds an MBA from the University of Chicago Booth School of Business and an MSc. in Computer Science from the Open University of Israel. Ori has experience investing in both developed and emerging markets. His interests include economics, strategy, logic games and puzzles, artificial intelligence, science, physics, astronomy, and futurology.

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