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David Herro Comments on Samsung Electronics

During the quarter, we added one new international holding, while the U.S. count dropped by one when the takeover offer for USG (NYSE:USG) was completed. Samsung Electronics (XKRX:005930) (South Korea) is a name we have followed for some time and held in the past. Recent share price weakness once again afforded us the opportunity to initiate a position in this company at a discount to our estimate of its intrinsic value. As a reminder, we find that Samsung enjoys several competitive advantages, including a diverse product line-up, strong global distribution and scale. Along with producing a robust portfolio of consumer electronics and mobile phones, the company is a world-leading manufacturer of semiconductors, a business segment that we find particularly attractive because we believe it provides ongoing revenue and profit. Moreover, due to Samsung's leading market position and financial strength, it has been able to either maintain or increase both research and development and capital expenditures even during down cycles. We also appreciate the company's solid balance sheet, strong free cash flow generation and track record of returning capital to shareholders via dividends and share repurchases. All of these attributes add to our confidence that Samsung is committed to adding value for its shareholders.

From David Herro (Trades, Portfolio)'s second-quarter 2019 Oakmark Funds shareholder letter.
This article first appeared on GuruFocus.