Warren Buffett has invested $27.9 million in YG-1 to acquire a 10% stake in cutting tool maker; Buffett believed that it is better to become a major shareholder of YG-1 and receive stable supply of its products than compete with YG-1

August 13, 2013 Leave a comment

S Korea-based YG-1 sets model of “creative economy”

Chung Soon-woo

2013.08.12

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The world’s renowned investment guru Warren Buffett has invested 31.2 billion won ($27.9 million) in a small and mid-sized business (SMB) in Incheon, South Korea to acquire a 10 percent stake. The company that caught his attention was YG-1, Korea-based cutting tool manufacturer. Mr Buffet, who is also a stakeholder of ISCAR, another global leader in the field, believed that it is better to become a major shareholder of YG-1 and receive stable supply of its products than compete with YG-1. YG-1’s flagship product, which made Buffett intimidated, is an endmill. An endmill is an ultra-precision cutting tool, which is mainly used to shape autos, trains and aircrafts, or their components. It is also a must-item for manufacturing such high tech products as smartphones and robots. YG-1 has remained top dog in the global endmill market.  The company has recently gained attention again as it has demonstrated the way to take the path toward the “creative economy” initiative proclaimed by President Park Geun-hye. YG-1, established in 1981, has led the world with its end mills alone and the story of its founder Song Ho-geun (aged 61) is an example of a creative economy textbook. Unlike other SMBs, which do whatever it takes to make money, YG-1 has been dedicated only to endmills.

Filed under Investing Process, Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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