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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Daniel Loeb, the founder of activist hedge fund Third Point, is expected to pursue an activist strategy centered on SK Square, according to a report published exclusively by Maeil Business Newspaper on Tuesday.
Third Point said it has been in communication with SK Square since the third quarter of last year, shortly after initiating its investment, to discuss ways to enhance corporate value. The fund has built what it described as a “meaningful” stake in both SK Hynix and SK Square—large enough to warrant active engagement with management. SK Hynix shares have risen more than 200% since the second quarter of last year.
Loeb said he has met with members of SK Square’s board since last summer to present concrete proposals aimed at addressing undervaluation, adding that Third Point holds a larger position in the more liquid SK Hynix shares.
Loeb is widely regarded as having raised the bar for shareholder activism by focusing not merely on short-term share price gains, but on structural reforms and long-term re-rating of companies. Since founding Third Point in 1995, he has led high-profile activist campaigns at global companies such as Yahoo, Sony, and Disney. Third Point played a key role in Yahoo’s management overhaul and restructuring in 2012, and pushed for board changes and cost-cutting measures at Disney in 2022.
While taking a more indirect approach with SK Hynix, Third Point has emphasized what it sees as deep undervaluation. According to the fund’s estimates, SK Hynix’s price-to-earnings ratio based on projected 2026 earnings stands at just 6.5 times. Based on current share prices, this implies that Third Point expects SK Hynix’s annual net profit to exceed KRW 100 trillion. Loeb said SK Hynix has already surpassed Samsung Electronics in next-generation high-bandwidth memory (HBM), adding that it is the most undervalued name in an already undervalued memory sector.
Third Point has also proposed capital market initiatives, including the issuance of American Depositary Receipts (ADRs), arguing that such a move would improve global investor access and trading liquidity. Loeb said SK Hynix should continue pursuing an ADR listing, which would further elevate its status as a core supplier in global AI infrastructure.
The fund believes both SK Hynix and SK Square should deploy a portion of their free cash flow more aggressively toward shareholder returns. In particular, Third Point argued that SK Square—whose net asset value (NAV) trades at a steep discount—should divest non-core minority stakes and even use leverage to fund large-scale share buybacks and cancellations. With SK Hynix likely to shift from a net debt position to a net cash structure as early as the first quarter of this year, Loeb said share repurchases would be a rational capital return strategy given the company’s growth outlook.
“The best investment SK Square can make is in its own shares,” Loeb said, adding that the company should buy back as much stock as possible, even if it requires borrowing.
Despite these proposals, Third Point stressed that it does not plan to launch an aggressive activist campaign ahead of this year’s annual general meetings. The fund also ruled out forming an activist alliance, or “wolf-pack strategy,” similar to the coordinated shareholder actions seen at Samsung C&T’s 2024 annual meeting.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
