Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

I investigate special situations, pairs, and index rebalancing trades in Korea.

Korea / Special Sits, Pairs, Index Rebalancing

LG H&H 1P/C Price Diversion: -2.7σ on a 20D MA & 1P Discount at 2-Yr Low

LG H&H 1P: Another Severe Deviation, Probably Resulting from Liquidity Gap

Event-Driven

<ul>
<li>Common was up 4.81% yesterday. 1P went up 2.45%. The duo is now at 232% of σ. Pref discount stands at 40.32%. This is above 120D mean. This much premium on Common is the highest since October. On 120D, price ratio is above 120D mean.</li>
<li>Current PER on FY19 earnings is 27x. Valuation wise, there doesn't seem to be much room for further upside. Local sentiments on the fundamentals outlook are relatively divided. This suggests that it'd be hard to build sustainable price momentums.</li>
<li>I'd trade this duo on the current divergence. Just, we are moving towards March shareholder meeting cycle. Div yield difference on Common/1P is also pretty minimal. I'd have this trade with a very short-term horizon.</li>
</ul>


Common was up 4.81% yesterday. 1P went up 2.45%. The duo is now at 232% of σ. Pref discount stands at 40.32%. This is above 120D mean. This much premium on Common is the highest since October. On 120D, price ratio is above 120D mean.
Current PER on FY19 earnings is 27x. Valuation wise, there doesn't seem to be much room for further upside. Local sentiments on the fundamentals outlook are relatively divided. This suggests that it'd be hard to build sustainable price momentums.
I'd trade this duo on the current divergence. Just, we are moving towards March shareholder meeting cycle. Div yield difference on Common/1P is also pretty minimal. I'd have this trade with a very short-term horizon.


LG H&H Share Class: Long 1P / Short Common with a Short-Term Horizon

LG H&H (Pref)

LG H&H Share Class: Long 1P / Short Common with a Short-Term Horizon