# Blue Tower Asset Management Q3 2026 Letter

> Blue Tower reveals Enova merger collapse and South Korea's value opportunity.
- Title: Blue Tower Asset Management Q3 2026 Letter · Seekingalpha
- Summary: Blue Tower reveals Enova merger collapse and South Korea's value opportunity. Blue Tower reports Enova abandoned Grasshopper Bank merger due to regulatory…
- Keywords: blue tower, enova, grasshopper bank, south korea, korea discount, corporate governance, value investing, kospi, kosdaq, shareholder returns, money, business
- Source: Seekingalpha — https://seekingalpha.com/article/4955726-blue-tower-asset-management-q3-2026-letter
- Author: Blue Tower Asset Management, LLC
- Published: 2026-10-21T05:28:00+00:00
- Read time: 2 min
- Topics: blue tower, enova, grasshopper bank, south korea, korea discount, corporate governance, value investing, kospi, kosdaq, shareholder returns, money, business
## Q3 Performance
Blue Tower's Global Value composite achieved 0.54% net performance (0.83% gross) for Q3 2026, with year-to-date net performance at 21.50% (22.50% gross).
## Enova-Grasshopper Merger
Enova abandoned its merger with Grasshopper Bank after regulatory delays, paying $4 million in a mutual termination agreement on October 16, 2026.
## Regulatory Opposition
20 state and district attorneys general raised concerns about Enova's merger potentially circumventing state usury laws by exporting interest rates nationwide.
## Market Reaction
Enova shares fell 23.4% on September 15, 2026, from $226.72 to $173.61, erasing $1.3 billion market value.
## Enova's Performance
Enova's Q2 2026 revenue grew 22% year-over-year to $929 million, with originations up 27% to $2.3 billion.
## South Korea Opportunity
Blue Tower identifies South Korea's governance reforms as a catalyst for value opportunities in equities after years of low shareholder returns.
## Korea Discount
South Korean stocks trade at a discount due to poor corporate governance, chaebol crossholdings, inheritance tax issues, and low shareholder returns.
## Governance Reforms
South Korea's 2025 Commercial Code amendments require directors to prioritize shareholder loyalty, with 3% vote caps for controlling shareholders and mandatory cumulative voting.
## Small Caps Opportunity
KOSDAQ small caps offer value opportunities due to retail investor dominance, limited analyst coverage, and improved English disclosure requirements.
## Market Rallies
KOSPI rose 75.6% in 2025 and doubled to 9,114.55 on June 22, 2026, driven by Samsung Electronics and SK Hynix.
## Blue Tower's Strategy
Blue Tower targets high-quality businesses with durable competitive advantages and strong shareholder returns in South Korea's emerging market.
## Shareholder Returns
South Korea's shareholder payouts were 28% for the decade ending 2021 versus 89% for the US, with reforms improving returns.
## Korea Discount Causes
Poor corporate governance, chaebol crossholdings, inheritance tax issues, and low shareholder returns created the Korea discount.
## Korea Discount Impact
63.5% of KOSPI companies traded below book value as of April 2026, compared to Japan's TSE Prime Market before reforms.
## Dividend Tax Reform
Reforms allow companies paying at least 40% of earnings to qualify for a top 30% dividend tax rate, with 617 companies adopting this treatment in 2026.
## Shareholder Proposals
218 shareholder proposals were filed at 56 companies during 2026 annual meetings, a 44% increase from the prior year.
## Key takeaway

Blue Tower reports Enova abandoned Grasshopper Bank merger due to regulatory delays, while South Korea's governance reforms create value opportunities for investors.