South Korean Hedge Fund Calls for Samsung to Buy Back Preferred Shares

Life Asset Management, a hedge fund based in South Korea, is urging Samsung Electronics to repurchase and cancel its preferred shares, which are currently trading at a significant discount compared to common stock. The fund has requested that the Samsung board review this proposal during its meeting in October, with the aim of completing share cancellations by December.

The discount on Samsung's preferred shares has been a persistent issue, with the gap recently narrowing to approximately 26% from a peak of around 37%. This trend has been influenced by speculation regarding potential buybacks. The situation is not unique to Samsung; across over 100 South Korean companies, preferred shares generally trade at an average discount of 45% compared to common stock due to factors such as reduced voting rights and lower liquidity.

In August 2026, Samsung announced a substantial shareholder-return initiative valued at up to 110 trillion won (approximately $81.8 billion) through 2030, which includes plans to repurchase discounted preferred shares. This strategy is seen as a way to return capital while navigating regulatory constraints that limit ownership of voting stocks, thus allowing the company to avoid increasing the controlling family's stake in common shares.

Life Asset Management's push reflects a growing trend of shareholder activism in South Korea, where conglomerates, known as chaebols, have historically favored founding families over minority shareholders. The hedge fund's timeline for board consideration and execution of the buyback plan is ambitious, suggesting a potential clash with Samsung's longer-term approach to shareholder returns.

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Source: KLEA News