Weiss Korea Opportunity Fund is geographically focused on South Korean companies. The Company invests primarily in listed preferred shares issued by companies incorporated in South Korea, which in many cases are currently trading at a discount to the corresponding common shares of the same companies. The company says that “In South Korea, the term “preferred share” is a misnomer and Korean preferred shares are misunderstood by many Western investors. Korean preferred shares are more similar to non-voting common shares than the preferred shares in many other countries. In general, Korean preferred shares do not have a fixed dividend or a maturity date. Instead, the typical contractual terms of preferred shares state that their dividends will be incrementally higher than the dividends of their corresponding common shares. Hence, those preferred shares fully participate in dividend growth of the issuer. In spite of this, many Korean preferred shares trade at significant discounts to their corresponding common shares. For example, LG Electronics ordinary shares closed at 74,300 on 30 June 2014 while the preferred shares closed that day at 37,000 (roughly half the price of the ordinary shares). As a result of this anomaly, typically preferred shares’ price-to-earnings ratios are substantially lower, and their dividend yields are higher than their corresponding common shares.”
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