Lessons From My Grandfather

By Damon Darlin | Forbes | 02.14.1994

James Rosenwald, a New York stockbroker, visited Japan in 1966. He put a question to the chairman of Osaka’s Fuji Fire & Marine Insurance: How much is Fuji’s headquarters building worth? The answer surprised him. It was worth more than the market value of the company. Rosenwald began buying Japanese insurance stocks and made a lot of money for himself and his clients.

Fast forward to 1991. Rosenwald’s grandson, James B. (Jamie) Rosenwald III, goes to Seoul, South Korea. He visits Ankuk Finer & Marine (now Samsung Insurance) and poses the same question his grandfather put to the top man at Fuji: How much is your headquarters building worth?

History repeats. “I could buy the whole company for the unrealized value of the headquarters building,” says Rosenwald.

Like his grandfather, Rosenwald invests in Asian insurance companies because he sees them as a leverage play on the economies in which they operate. As countries build their industrial bases and consumer markets grow, the need for insurance rises, and the insurance companies invest their premiums in the local stock and real estate markets. Buying into an insurer is a way to accumulate a diversified portfolio of local stocks and bonds, many of which might not be available to public investors. “If you buy Samsung Electronics, you get Samsung Electronics,”says Rosenwald. “But if you buy Hyundai Fire & Marine, you get exposure to the rest of the Hyundai group, a lot of which is still privately held.”

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