Chan Lee and Albert Yong presented their in-depth investment thesis on Nexen – Holdco and Preferreds (Korea: 005720 and Korea:002355) at Asian Investing Summit 2014.
Nexen – Holdco and Preferreds: Established in 1958, Nexen manufactures automobile tires and is currently one of the fastest growing tire manufacturers in the world – a “hidden” champion from Korea with superior cost competitiveness via state-of- art manufacturing facilities and a skilled labor force. While common shares (Korea: 002350) are attractive in themselves, the unique features of the Korean equity market offer two alternative – and superior – ways to invest in Nexen: 1) Holding company (Korea: 005720): Nexen Corp., the HoldCo, owns 40.8% of Nexen Tire plus other subsidiaries. Equity stake in Nexen Tire represents ~70% of the Holdco’s value. The HoldCo shares trade at an estimated 55% discount to the value of its parts, including Nexen Tire at market value; 2) Preferred stock (Korea:002355): Many Korean preferred stocks trade at about 60% discount to the equivalent common stocks. While preferred stocks have no voting rights, they confer the same economic benefits as common stocks. Nexen preferreds currently trade at a ~60% discount to the common.
About the instructor:
Albert H. Yong is a Managing Partner and the CIO of Petra Capital Management, an investment advisory and portfolio management firm based in Seoul, Korea which focuses on undervalued Korean public companies whose market prices are significantly discounted to intrinsic value. Albert believes that the Korean stock market offers exceptional value investing opportunities because many Korean companies are still cheaply valued compared to their earning power and balance sheet. Albert utilizes a disciplined and patient deep value investing approach to seek superior risk-adjusted returns with limited volatility and bases his investment decisions on detailed, research-based analysis and thorough due diligence. Prior to co-founding Petra, Albert was a Managing Director and the CIO of Pinnacle Investments and a Vice President of Pan Asia Capital where he was in charge of managing the Korean equity portfolio. Albert received his MBA from the UCLA Anderson School of Management and his BS in Electrical Engineering from Seoul National University.
Chan H. Lee is the co-founder and a Managing Partner of Petra Capital Management. Since inception in fall 2009, its Petra Korean Value Equity Strategy has returned 24.4% annualized, net of all fees to investors. Chan is constantly on the lookout for mispricing opportunities and special situations where investors can profit handsomely from a subsequent change of valuation. Chan believes that Korea offers numerous investment opportunities for activist investors. Prior to co-founding Petra, he worked as an investment banker and corporate attorney for more than 10 years in Korea. Chan’s career has focused on the analysis and execution of mergers, acquisitions, joint ventures, restructurings and debt and equity financings across a broad range of industries. Chan received his JD from the UCLA School of Law and his BS in Business Administration from the University of California at Berkeley where he was a member of Beta Gamma Sigma.
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