(Bloomberg) -- Samsung Electronics Co., which closed at a record Wednesday, has more gains to offer to shareholders, according to Templeton Global Advisors President Norman Boersma, who also runs the $13 billion Templeton Growth Fund.
The South Korean conglomerate said Tuesday it's reviewing splitting itself into holding and operating companies and boosting dividend payouts. The plan, a response to calls from Elliot Management Corp., could increase transparency at Samsung, whose founding Lee family has resisted outside influence as it built the country's most valuable company.
“We've probably benefited from the family's reluctance to do anything that would blatantly disadvantage minority shareholders at the most visible part of its empire,” Bermuda-based Boersma, who's held the shares for 15 years, said in an e-mail Tuesday. “We should continue to benefit from the upstreaming of dividends as consolidation continues.”
Samsung is the Templeton Growth Fund's largest holding among 88 stocks, data compiled by Bloomberg show. The fund is beating 95 percent of its peers with a 5-year return of 9.6 percent. Samsung shares gained 4.1 percent to a record 1,746,000 won in Seoul trading Wednesday, extending this year's gain to 39 percent. The stock was down 0.1 percent in early trading in Seoul on Thursday.
By setting up a holding company, the Lees could avoid inheritance taxes, according to Dong-Yang Kim, an analyst at NH Investment & Securities Co. Samsung Chairman Lee Kun-hee has been hospitalized since 2014.
Click here to read more about Samsung's plan
“Samsung's restructuring should eventually lead to a more streamlined corporation, but it wasn't necessarily borne of a genuine desire for improved corporate governance,” Boersma said. “Succession issues among the controlling family likely also played a major hand.”
Global Bets
Outside Korea, Boersma said he's been betting on European banks, whose valuations were “abundantly cheap” despite the uncertainties presented by the U.K.'s vote to leave the European union.
“European banks have been able to protect profits by cutting costs, growing fee-and commission-based business lines and benefiting from a gradual pickup in lending activity,” he said.
Click here to read an interview with Boersma from April
To contact the reporter on this story: Heejin Kim in Seoul at hkim579@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, Vivek Shankar
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