Palliser Capital wants Samsung Electronics Co. to issue US-listed American depositary receipts (ADRs) at a premium and use the proceeds to buy back and cancel preferred shares, aiming to narrow the 20%+ discount those securities trade at. Founder James Smith called the discount an overlooked governance anomaly that undermines capital efficiency. The move would unlock trapped value and support Korea’s ongoing market reform efforts.
Samsung’s preferred shares carry no voting rights and currently trade at a steep discount to common stock. Seoul-based hedge fund Life Asset Management recently made a similar call. Palliser also urged Hyundai Motor Co. to prioritize preferred-share repurchases, noting its nearly 50% discount.
The average Korean preferred-share discount is 46%, far above the <5% seen in developed markets. More than $60 billion in trapped value could be unlocked if all preferred shares traded at par, Smith argued. The ADR listing of SK Hynix Inc., which trades at a >40% premium, was cited as a precedent.
Palliser called for explicit discount targets in corporate value-up plans.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing