Palliser urges Samsung to list US shares, buy preferred stock

Activist hedge fund Palliser Capital has urged Samsung Electronics to issue American depositary receipts in the US and use the proceeds to repurchase and cancel preferred shares. The shares trade at a discount of more than 20% to Samsung’s ordinary stock in South Korea.

Palliser founder and Chief Investment Officer James Smith presented the proposal at the Sohn San Francisco Investment Conference on Tuesday. The fund proposed pricing the ADRs at a premium to Samsung’s Korean-listed shares and using the proceeds for additional preferred-share buybacks.

Samsung’s preferred shares do not carry voting rights. Palliser said reducing their discount could improve capital allocation and shareholder returns.

Smith pointed to SK Hynix as an example of potential overseas demand. The chipmaker’s US-listed ADRs trade at a premium of more than 40% to its domestic shares, according to Palliser.

The proposal follows a similar call from Seoul-based hedge fund Life Asset Management in September. The fund urged Samsung to continue repurchasing and cancelling preferred shares until the discount to ordinary stock is eliminated.

Palliser has also urged Samsung and Hyundai Motor to give priority to preferred-share repurchases in their shareholder-return plans and set targets for narrowing the valuation gap. Hyundai’s preferred shares trade at a discount of nearly 50% to its ordinary stock.

Preferred shares listed in South Korea trade at an average discount of 46% to ordinary shares, compared with less than 5% in developed markets including the US, UK and Canada, Palliser said. Smith estimated that bringing South Korean preferred shares to parity with ordinary shares could release more than $60 billion in shareholder value across the market.

The proposal comes as South Korea continues its Corporate Value-up programme, introduced in 2024 to improve corporate governance, capital allocation and shareholder returns. Palliser has called for reducing preferred-share discounts to be included in the next stage of the reforms.