April 26, 2024

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[THE INVESTOR] South Korean conglomerates including Samsung Electronics, Hyudai Motor, SK hynix and LG Household and Health Care, are in danger of becoming targets of activist hedge funds, according to a report by Dongbu Securities released on Jan. 16.

Listed companies in which foreign investors hold larger stake than the largest shareholder, in particular, are more vulnerable, said analyst Nam Ki-yun in the report.

Activist investors are expanding their scope of actions, specifying strategies and evolving with intent, and their eyes are zeroing in on Asia and its family-owned businesses. 

Korean conglomerates are likely targets “as they are not exposed to capitalist principles of checks and balance, and their largest stakeholders’ shares are relatively low,” explained Nam.

According to the report, foreign investors’ stake in Samsung Electronics and Samsung Life Insurance amount to 50.8 percent and 47 percent, respectively, while the largest stakeholders own 18.4 percent and 18.5 percent each. Hyundai Motors’ largest shareholder owns 28.2 percent stake while foreigners account for 43.4 percent stake. As for POSCO, the gap is even larger at 10.6 percent and 52.3 percent. 

By Hwang You-mee (glamazon@heraldcorp.com)