market folly

We're posting up notes from the 2014 Value Investing Congress in New York. Next up is the winner of the SumZero International Ex-US stock competition who presented long Samsung.


SumZero Contest Winner: Value Investing Congress Presentation

Employer focus on: cheap, honest/good managers, dominant market position, global brands, strong balance sheet

The pitch is basically sum of the parts (SOTP)
(1) Misunderstood: a lot more than handsets
(2) Just the semiconductor business is worth more than what the entire co trades for//discount for whole biz is 50%
(3) Global leader in  a number of products
(4) Several catalysts: asset sales, succession plan, restructuring and buybacks
(5) Solid management

Downside thesis is very short term
(1) No growth in smart phones
(2) Chinese competition
(3) Copy-cat products
(4) Not shareholder friendly

SOTP: cash + semi + display + home appliance + IT/mobile = 149% upside 

Solidly run business: vertical integration, low cost, R&D and ad spend

Catalysts: unit IPOs, 2015 expiration of tax incentives to simplify structures

Recommends reading The Samsung Way

Can buy in Korea (have paperwork to fill out = barrier), likes the preferred there


Q&A Other Korean preferreds are irrationally cheap (Tilson likes them too, has several; also has Samsung common and preferred)

Q&A Family incentive to keep the prices low? Should end soon.

Q&A: Also owns POSCO, reads Korea Times

Q&A: Not afraid of Chinese competition


Be sure to check out the rest of the Value Investing Congress presentations here.