First Eagle Global Real Assets Fund on SK Square Co., Ltd.
Thesis
SK Square's primary asset is SK Hynix, one of the world's major manufacturers of DRAM and NAND memory. Strong memory-chip demand supported the holding during the quarter. The fund believes SK Square still trades at a substantial discount to the value of its SK Hynix stake despite progress in narrowing that gap. Management has also been active in implementing governance changes aimed at reducing the holding-company discount, leaving the shares attractively valued relative to underlying assets.
“SK Square, in our view, continues to trade at an attractive valuation relative to its underlying assets.”
Key risks
- The substantial holding-company discount to the value of SK Hynix may persist.