I’ve decided to give this Korean net net its own writeup rather than go into a batch. It looks too excellent to ignore. The Korean net nets series will continue as usual in batches from early next week.
Here are some characteristics of the stock we’re dealing with today:
- The market cap is entirely covered by cash and securities. You get the opco for free.
- This ain’t no cigar butt. I can’t say too much before the paywall, but it has a protected moat, evident in its consistently high operating margin with negligible capital investment.
- EBIT has compounded at double-digit rates for 7 years, and so has the cash pile. It has never lost money as far as we can see. It trades at a single-digit P/E.
- It pays dividends and has bought back >5% of the shares over the past 3 years (with most of the treasury shares cancelled by the board before the bill was enacted that required mandatory cancellation of treasury shares).
- It even has an unusual shareholder register for a Korean microcap, with ownership split between the founder and a handful of operating officers. The register is pretty open.
A net net like that doesn’t grow on trees. Let’s dig in.