Stephen Yacktman and Jason Subotky presented their in-depth investment thesis on Samsung Preferred (Korea: 005935) at Best Ideas 2015.
Samsung Preferred is a megacap technology company that trades at a steep discount to any of its global peers. At current prices the preferred, which in Korea is like a non-voting common, sells for less than the value of its semiconductor business plus net cash + investments. In total, Samsung has leadership positions in Mobile, Semiconductor, Display, and Consumer Electronics businesses and should generate more than $190 billion in sales in 2014 and $22 billion in operating income. Samsung has made significant investments in foundry and display, which offer potentially significant upside if successful. After accumulating significant excess cash on the balance sheet over the last few years, the company recently announced a share repurchase and potential dividend increase, which could boost interest in the shares. The company is also undergoing a transition in leadership which could help increase the value of the shares. The preferred trades for slightly more than 3 x 2014 EV/EBIT, which is an extraordinary discount to global peers.
About the instructors:
Stephen is Chief Investment Officer, Partner, and Portfolio Manager of Yacktman Asset Management. He joined Yacktman Asset Management in 1993 as an analyst and has been co-manager for AMG Yacktman Focused Fund and AMG Yacktman Fund since 2002. In 2006 he was named Co-Chief Investment Officer and Senior Vice President of Yacktman Asset Management. Stephen was a finalist for Morningstar’s Domestic-Stock Manager of the Year award in 2011. He graduated from Brigham Young University with an economics degree and MBA. He is a member of the Management Committee of the firm.
Jason is Partner and Portfolio Manager of Yacktman Asset Management. He joined the firm in 2001, having previously worked as a General Partner at Peterschmidt Ventures and as a Vice President at Goldman Sachs. Jason received a BMusic from the University of Southern California and an MBA from Brigham Young University. Jason is a co-manager for AMG Yacktman Focused Fund and AMG Yacktman Fund and is a member of the Management Committee.
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