Seoul, Aug 13 - Food and domestic sales-focused companies are better bets than Samsung Electronics, a fund manager known as South Korea's Warren Buffett said on Thursday.
Lee Chaiwon, chief investment officer of Korea Investment Value Asset Management Co Ltd, is a strong supporter of Buffett's investment strategy of finding hidden intrinsic value and sticking to those stocks for several years.
Lee has bought snack and noodle maker Nong Shim , in pursuit of a South Korean version of Coca-Cola Co, which Buffett has invested in.
"Large caps are hard to be targets of value investment. Hundreds of analysts are watching Samsung Electronics every day. Then would it be possible that Samsung is undervalued?," he told Reuters in an interview.
The 20-year stock veteran points a possible rapid appreciation in the won as a major risk for domestic stocks and remains cautious about banks, led by KB Financial , saying assessing their intrinsic value is difficult.
Lee, 45, oversees five funds with a combined assets of 1.4 trillion won ($1.1 billion) at the unit of Korea Investment Holdings.
His stock fund has not owned Samsung Electronics for nine years and is waiting for a downturn in IT stocks to buy the world's top maker of memory chips and LCD panels.
He favours stocks with a stable earnings structure and high dividend payouts and has held state-run utility Korea Electric Power Corp (KEPCO) for 12 years.
His top picks also include broadband operator KT Corp , retailer Shinsegae, tobacco manufacturer KT&G and cosmetics brand Amorepacific .
Lee expects Seoul shares to hover at current levels after a 40 percent rally this year.
"The KOSPI is at a balance point now, or can be regarded as being a little bit overshot without reflecting the assumption that the economy will do better next year," Lee said.
"It is unlikely that there will be a systemic risk, nor the market will head for a big rally."
The Korea Composite Stock Price Index (KOSPI) touched a one-year high this month, buoyed by steady foreign buying which reached a net 2 trillion won on the month to date.
His stock fund, translated into Korea Value 10-year Investment Fund, was launched in 2006 and posted an accumulated return of 41 percent, versus a 11 percent rise in the KOSPI during the period after sharp fluctuations.
Lee, who wrote a book titled "Value Investment" in 2007, says it takes about 3 years for a stock to fill a gap between intrinsic value and market prices, based on his experience.
His main targets should be hardly traded, isolated and not be followed by analysts, such as plastic manufacturer DCM and energy parts maker MYSCO.
"Our benchmark is not composite stock indexes, but interest rates plus alpha," he said in his company Website.