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How to Safely Play Samsung Stock and Samsung’s Foldable Phone

Will Ashworth

Many people were all excited about Samsung Electronics (OTCMKTS:SSNLF) because of the upcoming launch of the Galaxy Fold, the smartphone maker’s expensive, foldable phone. Some even thought about buying some Samsung stock.

Source: Samsung

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Then the bad news hit.

Reviewers, who were given the $1,980 phone before the launch, reported that the phones broke after they were used for two days. That’s never good under any circumstances, but when phones cost almost  $2,000 each, buyers shouldn’t be upset before the phone’s even hit the market.

Samsung stock may recover from this debacle. That’s because the number of foldable smartphones Samsung plans to sell is tiny compared to the total number of smartphones it sells every year.

“It’s certainly an embarrassment to Samsung’s reputation, but this won’t have much financial impact on them since they created a whole new category of foldables with this product. There is no market share to lose,” said Patrick Moorhead, founder of high tech analyst Moor Insights & Strategy.  

Furthermore, although the device’s April 26 launch was postponed, it’s likely to go ahead at some point in late May or early June.

“We all know that Samsung has a technology that works. It’s likely that this glitch is a problem with mass production and the failure is just in the single-digit percentage,” said IHS Markit analyst Wayne Lam.

Still not convinced?

Here are three ways to indirectly play Samsung stock that won’t hit you in the pocketbook  if  the foldable phone controversy proves to be more than temporary.

Buy a Geographic ETF

The simplest way to get exposure to Samsung stock  while protecting your backside is buying an ETF that owns SSNLF stock.

The ETFs with the most substantial Samsung weighting are all South Korea ETFs. But most investors’ portfolios aren’t big enough to get so geographically focused. 

The ETF that makes the most sense is the iShares S&P Asia ETF (NASDAQ:AIA), which tracks the performance of the S&P Asia 50 Index, a collection of 50 of Asia’s largest companies. It charges 0.50% annually and comes with a Samsung weighting of 10.96%. Samsung stock is the second-largest holding in AIA.

Companies based in China, South Korea, and Hong Kong account for 77% of its $1.1 billion in net assets.

Buy a Sector ETF

Some technology ETFs  will provide a decent amount of exposure to Samsung stock.

At first glance, I might be tempted to go for the First Trust NASDAQ CEA Smartphone Index Fund (NASDAQ:FONE), because it focuses on companies in the smartphone industry. However, it’s in the process of changing its investment objective to focus on companies that should benefit from 5G.

Until FONE unveils its new assets in late May, I’d suggest going with iShares Global Tech (NYSEARCA:IXN), which tracks the performance of 116 information technology stocks in the S&P Global 1200 Index. It charges 0.47% annually, and Samsung stock accounts for 3.25% of its total assets.

Do Nothing

This last option isn’t much consolation to any investor hell bent on buying Samsung stock, but it’s a safe decision nonetheless.

Why buy a stock that’s hard to own for small investors when there are so many other options that trade on the NYSE and NASDAQ, like Apple (NASDAQ:AAPL) or Microsoft (NASDAQ:MSFT).

Investing’s already too difficult for the average investor. Don’t make it harder on yourself by seeking out stocks like Samsung Electronics.

It’s just not worth it.  

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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