Michael Burry's disciple has warned that the low valuations of South Korean stocks conceal a hidden trap: much of that value is often beyond the reach of minority shareholders.

Phil Clifton, founder of Cupertino, California-based Pomerium Capital Management LLC, met with roughly twenty companies in South Korea and Japan during a trip in August. According to a letter to investors dated September 29 seen by media, he became convinced upon returning that investing in South Korea "requires extra caution and close attention to management incentives."

In the letter, he wrote that "the South Korean stock market at first glance looks like a capitalist paradise," full of companies with healthy profit margins and steady growth. But he pointed out that shareholder interests and the interests of the people actually running the businesses are often misaligned.

Clifton said that although many South Korean companies trade at substantial discounts to global peers, this extra value often cannot be truly captured by minority shareholders — especially at companies where founding families retain absolute control.