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 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
