David Hurwitz is a Partner at SC Fundamental, a value-based long/short hedge fund founded in 1990. In focusing on value, SC invests as if there were no market. That is, it attempts to buy stocks and bonds which would provide good returns even if it could never sell them.

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David Hurwitz

David Hurwitz spoke at the 9th Annual Value Investing Congress, also see South Korean Preferred: Hidden Cove Of Value In A Bull Market. Below are notes from his presentation.

Highlights from David Hurwitz’s presentation

Korea GDP 15th in world

KOSPI Composite Index (INDEXKRX:KOSPI) 9x pe and 1.1x book

ROE is lower due to more cash

Korean companies receptive to shareholders. Management owns large stakes, rights protected.

Issues

Not all report difficulties well

Need a tracing ID

Volume is lower

Switch to IFRS

IDEA 1: Sambo Development 010960 ticker

Constructs highways tunnels for government 90% revenue

Valuation at purchase

Cash 106% of market cap

Price to book: 50%

Average ROE: 12.8%

P/E 6.3x on depressed earnings

15 years of profit

Issues: cash in biotech stocks, VC investments. Started a losing asset management business

Progress

Passed resolution to repurchase shares

Reviewing dividend policy

Possibly closed asset management business

Earnings at a low

May be convinced to sell biotech investments

2. KTCS CORPORATION (KRX:058850) – telecom 058850

Call center services

Resells services by Korea telecom

Valuation

Net cash 76% market cap

NCAV 82% of market cap

P/E 7.3x

Average ROE 12%

Ev to ebit 1.2x

Issues

Cash pile

Bloated cost structure

411 business declining

Korean telecom controlled

Progress 

Local shareholders have a proposal

CEO purchased shares

Auditor changed

David Hurwitz Opportunities for Activism in Korea by scribdvw