In the book – The Snowball: Warren Buffett and the Business of Life, there’s a lengthy quote by Warren Buffett describing his investing strategy from finding opportunities in South Korean companies. Buffett highlighted the value he found in South Korean companies that were trading at low valuations despite being fundamentally strong businesses.
Here’s his quote from the book:
Buffett: Lookit, he said, “this is how I do it. They are quoted in won. If you go to the Internet and look them up on the Korean stock exchange, they have numbers instead of ticker symbols, and they all end in zero unless it’s a preferred stock, in which case you click in five.
If they have a second class of preferred, you don’t click in six, you click in seven. Every night you can go on the Internet at a certain time and look up some issues and it’ll show you the five brokerage firms that would have been the largest buyers and the five that would have been the largest sellers that day. You have to set up a special account with a bank in Korea. That’s not easy to do. I’m learning it as I go along.
It’s like finding a new girl to me.
These are good companies, and yet they’re cheap. The stocks have gotten cheaper than five years ago, and yet the businesses are more valuable. Half of the companies have names that sound like a porno movie.
They make basic products, like steel and cement and flour and electricity, which people will still be buying in ten years. They have a big market share in Korea, which isn’t going to change, and some of these companies are exporting to China and Japan too.
Yet for some reason, they haven’t been noticed. Look, this flour company has more than its market value in cash, and it sells at three times earnings. I couldn’t buy very much, but I got a few shares. Here’s another one, a dairy. I could end up with nothing but a bunch of Korean securities in my personal portfolio.
You can find a copy of the book here:
The Snowball: Warren Buffett and the Business of Life
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