The London-based investment firm Palliser Capital has called on Samsung Electronics and Hyundai Motor to tackle the substantial price difference between their preferred and common shares, arguing this gap represents over $60 billion in untapped value within South Korea’s stock market.
Palliser Highlights Discounts in Korean Preferred Shares
At the Sohn San Francisco Investment Conference, Palliser’s founder and Chief Investment Officer, James Smith, formerly of Elliott Investment Management, pointed out that Korean preferred shares often trade at significant discounts compared to common shares, despite offering similar financial benefits. Unlike preferred shares in many international markets, Korean versions typically lack voting rights, which contributes to their lower prices.
Palliser noted that Samsung’s preferred shares are priced 26 percent below their common counterparts, while Hyundai Motor’s three preferred share classes average a 48 percent discount. As of Thursday, Samsung’s common shares were valued at 237,500 won, with preferred shares at 176,600 won. Hyundai’s common shares stood at 317,500 won, while its preferred shares were around 164,700 won.
Palliser urged both companies to focus on buying back and canceling preferred shares and to set clear targets for reducing these discounts in their Value-Up plans. For Samsung, the fund suggested issuing American depositary receipts (ADRs) at a premium to fund additional preferred share repurchases, similar to a move by SK hynix.
“The natural next step to reduce the discount is for boards to address preferred shares explicitly in their Value-Up plans through buybacks, explicit discount targets and other accretive measures,” Smith said.
Samsung has approached the issue cautiously, emphasizing the need to treat common shareholders fairly. The company stated it is “considering ways to address the discount of preferred shares relative to ordinary shares and enhance their value.” Hyundai Motor has acknowledged the gap and taken initial steps, but Palliser believes both companies need to do more.
Palliser has a history of activist campaigns involving major Korean firms. In 2024, it acquired over 1 percent of SK Square and pushed for increased share buybacks. Last year, it urged LG Chem to overhaul its board and repurchase shares, citing a 74 percent discount to net asset value, though most of its proposals were rejected. The fund also joined an unsuccessful push for higher dividends at Samsung C&T.
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