Samsung urged by hedge fund to buy back preferred shares in push to close valuation gap

A South Korean hedge fund is pushing Samsung Electronics to do something about a problem that’s been hiding in plain sight: the company’s preferred shares are trading at a roughly 26% discount to its common stock, and the fund thinks a targeted buyback could fix it.

Life Asset Management made its case on September 14, urging Samsung to repurchase and cancel its preferred shares. The fund wants the Samsung board to review the proposal at its October meeting, with share cancellations completed by December.

The discount problem

Samsung’s preferred shares have long traded below its common stock, but the gap has been particularly stubborn. At its widest, the discount hit around 37%. It’s since narrowed to roughly 26%, partly because investors started speculating that buybacks might actually happen.

This isn’t just a Samsung quirk. Across more than 100 South Korean firms, preferred shares trade at an average discount of 45% compared to common stock. The reasons are structural: preferred shares typically come with reduced voting rights, thinner liquidity, and the kind of governance questions that make institutional investors squint.

Samsung’s $81.8 billion shareholder return plan

Life Asset Management’s push didn’t come out of nowhere. In August 2026, Samsung unveiled a massive shareholder-return initiative worth up to 110 trillion won, approximately $81.8 billion, stretching through 2030. Part of that plan involves repurchasing discounted preferred shares.

The buyback structure is partly strategic. South Korean regulations impose ownership limits on voting stocks, which means buying back common shares could bump Samsung’s controlling family closer to regulatory ceilings. Preferred shares, which carry limited or no voting rights, offer a cleaner path to returning capital without triggering those constraints.

Retail investors have noticed. Since the August announcement, net purchases of Samsung’s preferred shares by individual investors have surged, with hundreds of billions of won flowing into the discounted stock. Meanwhile, those same retail investors have been selling common shares, essentially betting that the gap between the two classes will keep narrowing.

What this means for the Korea discount

Life Asset Management’s campaign is part of a broader wave of shareholder activism hitting South Korean corporate boardrooms. For decades, the country’s conglomerates, known as chaebols, have operated with ownership structures and governance practices that prioritize founding families over minority shareholders.

The timeline matters here. Life Asset Management wants board consideration in October and execution by December. That’s an aggressive schedule, and the shareholder-return plan runs through 2030, suggesting Samsung’s own leadership envisions a more gradual approach.

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