Activist Investors Seize SoftBank
What would you pay for Son “Masa’s” portfolio of ride-hailing apps, robotics, logistics, and autonomous driving start-ups? Shares in one of the world’s largest (and newest) holding groups, SoftBank, shot up 13% on Friday as a renowned activist investor, Paul Singer, bought in big. Here’s what that means!
SoftBank’s “Multi-Generational” Bets
Notable Companies | Industry | Size of Stake | |
Alibaba | 🇨🇳 | E-commerce | 29.5% |
Sprint | 🇺🇸 | Telecoms provider | 85% |
Vision Fund | |||
Uber | 🇺🇸 | Ride-hailing app | 15% |
Didi | 🇨🇳 | China’s Uber | 20% |
Grab | 🇸🇬 | Singapore’s Uber | 30% |
Doordash | 🇺🇸 | Food delivery | 15% |
Brain | 🇺🇸 | Autonomous robots | 40% |
Light | 🇺🇸 | Self-driving car cameras | 20% |
Coupang | 🇰🇷 | E-commerce website | 20% |
Wag | 🇺🇸 | Dog-walking app | 45% |
Plenty | 🇺🇸 | Indoor farming | 35% |
WeWork | 🇺🇸 | Shared workspaces | 80% |
Paytm | 🇨🇳 | QR code payments | 20% |
Slack | 🇨🇦 | Workplace messaging | 5% |
Paul Singer of Elliot Management isn’t the buy-and-hold type. He prefers to buy in the billions to garner a majority share of companies he feels have more to give, before waging war with management teams on the inside to get that stock price up. He’s an influential man on Wall Street, but often out of his positions within a few months, hit and run-style!
He’s now crashed Son Masayoshi’s party at SoftBank, the Japanese venture capital fund responsible for bringing many of our favorite tech unicorns to prominence. Masayoshi speaks proudly of his one-hundred-year ‘Vision Fund’ and its reliable Alibaba anchoring, but Singer’s got only one thing on his mind!
He believes there’s easy money in the company quite literally buying back its own stock, and investing in itself. This could be a useful idea if, from Slack to Wag, SoftBank’s internals add up to a greater value than today’s market value (which is Singer’s opinion). ‘Stock buybacks’ reduce the total number of shares in float, concentrating more value in those which remain and that are owned by 112 Invstrs in our community.
All Singer has to do now is fit this idea into Son Masayoshi’s one-hundred-year vision! In a press release out of Tokyo, Masa said he was in “complete agreement that shares were <60%> undervalued by public investors.” It was the extent of the buyback that could force more of a standoff.
It will easily push SoftBank into selling some of its Alibaba stake, so is SoftBank a better investment today than Chinese e-commerce giant Alibaba? That’s your billion-dollar question!
