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VALUEVEST MANAGEMENT'S
MARK BAKAR AND JOHN BURBANK
(continued from preceding
page)
OlD: Darn.
Burbank:That's the negative. The positive is that it's growing much more rapidly and earning higher returns - although you'd never know it from its reported results. It also hides its returns with very conservative reserving.
Bakar: Samsung Fire and Marine is a fabulous story.
It has premiums of something around $1.6 billion. And, here again. If it were a U.S. insurance company, I think it would easily be worth 1 times premiums.
And it's growing more rapidly than U.S. companies - and, again, much more rapidly than Samsung Life. Yet, its enterprise value isn't much over $300 million.
OlD: Only an 80% discount? Let's throw it back and wait for it to get cheap.
Bakar: To be able to buy a company of this quality at less than 20% of premiums is unbelievable.
OlD: Well, perhaps we shouldn't be quite so rash. Premiums do appear to have been growing very nicely. It looks like they grew 130%+ from 1993 to 1996.
Burbank: Like I said...
Bakar: Samsung Fire and Marine sold for as much as KW634,000 per share earlier this year. And foreigners had to pay a hefty premium - 30-40% - on top of that. Tonight. we're buying shares at KW190,000 with no premium at all. So it was selling at 4-5 times today's price.
OlD: Even before factoring in the cheaper won.
Bakar: Exactly. And I understand Julian Robertson visited Korea sometime around the middle of this year and was quoted subsequently as saying that one of the very few stocks worth buying was Samsung Fire and Marine.
OlD: And you think he might still like it?
Bakar: If he thought it was a bargain at KW400,000 and the currency was much more expensive than it is now, what do you think?
OlD: I think 80-90% discounts on those two ideas may be hard to beat - impediments and all.
Bakar They're amazing values. They really are.
AND A FUTURE THAT MAY BE MIGHTY SWEET
Baker: But having told you about couple of ideas with structural impediments galore, I should point out that while we are sifting through very cheap securities, we're looking for very good businesses without the impediments.
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THE PRECEDING WAS EXCERPTED VALUEVEST MGM'T'S |
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For additional information CitiCorp Center
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Page 14 of 14
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