The largest position in the portfolio is Samsung Electronics. The company trades at a significant discount to book value and has a free cash flow yield of nearly 10%. By any metric, Samsung Electronics (XKRX:005930) is a value stock, and yet from an operational viewpoint it does not resemble the state-owned banks and commodity businesses that are more typical in the value universe. Samsung has been appointed by Qualcomm (NASDAQ:QCOM) to manufacture its new state-of-the-art Snapdragon 820 chip using Samsung’s revolutionary FinFET 3D transistors. This comes as Samsung continues to develop its own powerful Exynos system chips, foldable displays and the next generation of semiconductors. Corporate restructuring continues and, from both an operational and a financial standpoint, Samsung Electronics remains a high-conviction holding.
From JOHCM Funds Emerging Market Growth commentary February.
