US Big 4 Asset Managers Also Invested 10.5 Billion KRW in SK Hynix

Top 4 US Asset Managers, The Capital Group
Became SK Hynix's 3rd Largest Shareholder Last Month
Loss of 10.5 Billion KRW in One Month Due to Stock Price Decline

Photo by Getty Images Bank

[Asia Economy Reporter Junho Hwang] "Buy at the knee, sell at the shoulder."

At the end of last month, the four major U.S. asset management firms became the third largest shareholders of SK Hynix. However, the stock price has hit new yearly lows, putting the company in an embarrassing position. Attention is focused on whether, as the long-standing saying in the securities industry goes, investing at the bottom will yield profits.

According to the Financial Supervisory Service's electronic disclosure system on the 28th, The Capital Group (with net assets of $3 trillion), known as one of the four major U.S. asset managers, secured a 5.05% stake in SK Hynix as of the 29th of last month. SK Square (20.7%), which spun off from SK Telecom, is the largest shareholder of SK Hynix, the third largest company by market capitalization on the KOSPI, and the National Pension Service (8.17%) is the second largest shareholder. As of June 30, only SK Square and the National Pension Service held more than 5% stakes, so The Capital Group became the third largest shareholder of SK Hynix.

The Capital Group exceeded the 5% threshold by purchasing 0.14% (1,019,515 shares) through on-market transactions on the 29th of last month. The purchase price was in the 92,000 KRW range per share, with a total investment of 94.1 billion KRW. Instead of buying directly, the stake was divided among 38 funds under management. The investment purpose was disclosed as "simple investment."

However, after their purchase, SK Hynix's stock price dropped significantly. This month, amid aggressive U.S. monetary tightening and a weak euro, the strong dollar has continued, pushing the stock to new yearly lows. The closing price on the 26th was 81,700 KRW per share, with the stock approaching the "70,000 KRW" level. At this point, the investment shows a -11.55% return, meaning about 10.5 billion KRW disappeared in less than a month.

Interestingly, this is not the first time The Capital Group has bought a large stake in SK Hynix and recorded negative returns. In August 2018, they also poured funds through multiple funds in a single day on the 29th, acquiring shares. The purchase prices then were 82,385 KRW and 82,700 KRW. However, as the stock price fell, they increased their holdings to 7.8% at prices between 57,690 KRW and 77,500 KRW. This was a kind of dollar-cost averaging to respond to the bear market. They only managed to sell shares above 80,000 KRW on October 18, 2019, after reducing their holdings to 4.54% by selling 1% to clubs.

After falling below the 5% shareholder threshold, no further transaction history appears. However, it is presumed that they earned some profits during the subsequent "COVID bubble." SK Hynix's stock price rose to the 100,000 KRW range in January 2020 and peaked at 148,500 KRW on February 25, 2021.

SK Hynix responded to this recent stake acquisition by stating, "We do not know the specific reasons, but it is judged to be for investment purposes due to stock price fluctuations."