Samsung Electronics (005930.KS)

They were a very secretive big conglomerate in Korea. Now, the son has taken over the leadership and it has become very different. Much more open and focused on return of capital. This used to be and still is mostly about their phones. Mobile devices are just over 50% of revenue, and they make the chips. The way they dealt with their Note7 problems was very impressive. They announced a global recall, no questions asked and gave you a little bit of a bonus back. They have already taken a $5-$6 billion of a write down, and there is probably a little more to come. They’ve also discontinued the line. This company generates cash flow. About 27% of their market cap is cash. Last year they generated roughly 5 trillion Won of cash flow, roughly $28 billion Canadian. They are spending just under 40% of it on a buyback this year. It is probably not going to grow that fast anymore, but now the D-RAM is growing very quickly because their competitors love their components. Very inexpensive. Pays a relatively attractive dividend for an Asian stock.

This has had a fabulous run, even adjusting for the Cdn$. The phone is the major driver of the asset, and the semiconductor business, which has a pretty positive outlook, in many cases as a loss leader cutting R&D for the phone segment. There are many cases where the phone companies are no longer around and this business could definitely come down. CEO is being investigated for bribery and corruption charges. He would wait for a pullback.

They’ve had their problems, but ultimately this is a really good company. A dominant player in telecom and semiconductors, and one can’t really ignore them. If it got cheap enough, this is something he would consider. He is starting to see signals coming out of management of improved corporate governance.

The problem he has with a lot of Korean companies is that they tend to be family controlled entities. About 50% of earnings tends to come from phones. Branded electronics can be very dangerous if you buy it at the wrong point in the cycle.

Several years ago, the chairman fell ill and his son has taken over. This has created a very different shift in the way the company behaves. There is more of a focus on capital allocation. Historically there was a very low dividend being paid, but there are now buybacks and increases in dividends. She likes this.

If you are trading in the US it is a difficult stock to buy. You have to decide about the currency. You can buy it through a South Korea ETF.

(A Top Pick Jan 17/13. Down 14.06%.) Still has 30% of the market share of the smart phone space. The Galaxy S5 is coming out, which could be a catalyst for the stock. You have to remember this company is in many different areas such as appliances, semiconductors, televisions, etc. Trading at a very cheap valuation of 8 or 9 times PE so he thinks there is tons of value in this name.

(Market Call Minute.) Coming out with really good numbers and is the believable alternative to Apple (AAPL-Q) in the smart phone space.

(Samsung on the Korean Exchange) Great company. Generates a significant amount of free cash flow that they can reinvest in innovations where they are a leader. The leader in the Android device format. Also, have a semiconductor side of their business, which has been doing okay but it looks like it is ready to ramp up a bit. Not sure how individual investors can buy the stock as there is no ADR for it.

(Korean Exchange.) Samsung. What you are doing is buying continuing expectations of further growth. This is a little bit challenging. Also which Samsung are you buying? You have chips, televisions, shipyards. This one is electronics. Chips area is going to have some challenges. Had a big fight with Apple (AAPL-Q) and their chips will most likely ultimately moved to Taiwan semiconductor. Next, what happens if their phones do not become the next big thing? Wait for it to be on sale.

London exchange. Looking to purchase this in the near-term. Into appliances, televisions and semiconductors but growth is really in smart phones. Sales are stronger than expected. Have great product launches. He is forecasting 290 million smart phones being sold in 2013, which is up 35% from 2012. Trading at 9X forward earnings. Sees a 15%-20% growth rate.

Samsung has done extremely well over the years in building their brand. Low-cost producer. Over 3 to 5 years, this will be a survivor. There has been a weakness in the flat panel space. Right now, they will not again market share but will not lose any either.

(A Top Pick June 5/07. Up 29%.) Samsung. A unique company because of its ability to innovate.

Reporting June 18 will be the first full quarter that new management has had control of the company. Seem to have gotten a pretty good handle on the company in a short order. Has tremendous potential on both solar and automated systems. With productivity being such a key issue there should be a demand for their products if they can get them priced better and profitably.

(foreign exchange is SMSN-LI) Add up the top 5 technological Japanese companies, Samsung surpasses their growth, with a good cash flow. Strong brand name.