A letter from Seoul-based Life Asset Management landed with Samsung's board and top executives this week, pushing for an aggressive buyback and retirement of preferred shares. The request is straightforward: keep canceling preferreds until the price gap with common stock is closed, have the board review it at an October meeting, and finish cancellations by December. Life Asset did not disclose its stake in Samsung.
The hedge fund is asking that up to 73 trillion won from Samsung's shareholder return package, after paying both special and regular dividends, be earmarked for equity repurchases. Given prices, the preferreds are the cheaper lever to pull. By Life Asset's math, the cash it takes to retire one common share could instead cancel about 1.36 preferred shares.
The discount is not small either. Samsung's preferreds trade more than 25% below the common and sit at their deepest gap in over a decade.
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Samsung recently mapped out up to 110 trillion won ($81.7 billion) in payouts for investors this year to spread an AI windfall, though it has not detailed the full plan. Many market watchers think buybacks will lean toward the preferred line because it stretches the money further. Traders took notice on Tuesday: preferred shares climbed up to 3.3%, the largest advance in almost a week, and the common gained 1%.
There is also a governance wrinkle. Prioritizing buybacks in preferreds rather than common stock could help the company avoid tripping a Korean rule that limits financial affiliates to no more than 10% of voting common shares.
Life Asset, which says it oversees $4 billion, is among the first shareholders to go public with this push. If Samsung skews buybacks to preferreds, it could retire more shares for the same cash while reducing the chance of running into voting-share limits. For everyday investors, the takeaway is simple: when a mega-cap signals a massive cash return and a cheaper mechanism exists to execute it, the part of the capital structure with the bigger discount is often where prices move first.
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