Over-the-counter listed company Longyen (5530) announced on May 11 that it disposed of U.S. stock Intel (INTC.US) ordinary shares. If the Intel stake of 87,500 shares disclosed in this transaction is traced back using the transaction amount and disposal gain revealed in the announcement, Longyen’s original cost was about NT$122 million, with an average buy-in cost of about $44.25 per share. Compared with the average sale price in this disposal of $118.89, the investment return rate was about 169%, equivalent to multiplying the original investment to about 2.69 times.
However, this deal still slightly underperformed Trump, who previously said he invested in Intel for the U.S. at an average of $20. He was extremely proud, saying that in 8 months he helped the U.S. earn $45 billion.
(Trump brags that his Intel investment quadrupled: in 8 months, I helped the U.S. earn $45 billion)
Longyen’s Intel disposal, return rate of 169%—a狂 profit of NT$390k
According to Longyen’s announcement, on May 8 the company disposed of 87,500 shares of Intel common stock at an average selling price of $118.89 per share, for a total transaction amount equivalent to about NT$327 million. The gain from this disposal amounted to NT$205 million. However, the company also stated that the realized gain was directly transferred from other equity under shareholders’ equity to retained earnings, and therefore did not affect profit or loss for the current period.
In other words, this is the unrealized gain accumulated from Longyen’s financial asset holdings in the past. After the disposal, it becomes realized and is included in retained earnings. If the transaction’s total amount of NT$327 million and the disposal gain of NT$205 million are used to trace back, the book cost of that batch of Intel shares would be about NT$121 million, meaning the investment return rate from this disposal deal is about 169%. If calculated based on the sale amount relative to cost, it is about 2.69 times.
As of now, Longyen still holds 131,500 shares of this Intel stock, with a holding value of NT$516 million.
From its core funeral business to asset allocation—Longyen’s investment profile is becoming clearer
Longyen’s typical image in the market in the past was that of a defensive company centered on funeral services, burial plots, and related life-rites businesses. But judging from this announcement, Longyen’s role in asset allocation is increasingly hard to ignore.
This is the key that makes the “Taiwan-version Berkshire Hathaway” narrative possible. Berkshire Hathaway’s core is not only its insurance business, but using the funds generated from its core business and long-term capital to conduct stock, corporate, and asset allocation, ultimately making investment returns an important source of value for shareholders. While Longyen’s scale, industry, and governance structure cannot be directly compared to Berkshire Hathaway, from a balance-sheet perspective, its marketable securities holdings are no longer just an accessory, but an important variable in evaluating corporate value.
The announcement also reveals that, calculated in accordance with the rules for handling the acquisition or disposal of assets by public companies, Longyen’s investment in marketable securities accounts for 29.51% of the total assets in its most recent financial statements, and it is even higher—79.05%—as a proportion of equity attributable to owners of the parent company. This means that if the market looks at Longyen only from the traditional funeral business angle, it may underestimate the impact of its financial asset position on the company’s value.
“The stock picker” Longyen’s investment journey
Longyen’s most classic investment was Changhua Bank. Longyen began buying Changhua Bank shares in 2013, accumulating an investment amount of about NT$5.6 billion and holding about 390k shares. In 2019, Longyen’s board decided to dispose of all Changhua Bank holdings. Based on the closing price at the time of NT$23.2 per share, the market value of the stake was about NT$9.1 billion, with a capital gain of about NT$3.5 billion. If cash dividends received during the investment period are added, total investment returns are estimated to reach NT$4.2 billion.
Based on the accumulated investment amount of NT$5.6 billion and total returns of NT$4.2 billion, the overall investment return rate from the Changhua Bank deal was about 75%. This transaction also cemented the market impression that, beyond its core business, Longyen would still do capital allocation. For a funeral services company, generating tens of billions in returns from investments in financial stocks makes it difficult for investors to assess Longyen only from the traditional funeral business perspective.
After liquidating Changhua Bank in 2019, Longyen quickly redirected its funds to Taiwan and U.S. stock market leaders. During the COVID-19 stock market crash in March 2020, Longyen announced spending about NT$300 million to buy TSMC, and about NT$327 million to buy Largan.
This TSMC deal later became an important case supporting Longyen’s “stock picker” image. According to later reports, in 2022 Longyen announced disposing of 835 TSMC shares at an average transaction price of NT$500.78 per share, for a total transaction value of about NT$418 million, with disposal gains of about NT$117 million. After the disposal, Longyen still held 1,061 shares of TSMC, and the announced holding cost at the time was about NT$383 million.
If calculated using that disposal transaction, the total transaction amount of NT$418 million minus the NT$117 million disposal gains implies an original cost of about NT$301 million, yielding an investment return rate of about 39%. But if viewed from the market impression that Longyen bought TSMC at low levels during the COVID-19 period in 2020, the real value of this deal is that Longyen dared to buy high-quality assets amid market panic, and then gradually realized part of the gains after the stock price rebounded.
In May 2020, Longyen announced buying 54,900 shares of Berkshire Hathaway common stock at an average cost of about $184.9568 per share. A few days later, Longyen also announced acquiring 8,110 shares of Google’s parent company Alphabet common stock, with a total transaction amount of about $10.07M, equivalent to about NT$303 million.
Longyen did not stop at Berkshire Hathaway and Alphabet afterward. In November 2020, the company announced that from April to November it had accumulated purchases of 59,930 shares of Microsoft common stock at an average cost of about $176.09 per share, with a total amount of about $10.55 million, equivalent to about NT$316 million.
This article, “Longyen’s ‘stock picker’ announcement: disposal of Intel and a狂 profit of NT$200 million! Looking back at the investment path of the Taiwan-version Berkshire Hathaway in the crisis,” first appeared on Chain News ABMedia.
