Author Topic: 9984 - Softbank  (Read 72858 times)

mwtorock

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Re: 9984 - Softbank
« Reply #160 on: September 24, 2019, 08:02:58 AM »
@thepupil: I think a lot hinges on the Vision Fund preferred shares payout. It seems that Softbank is on the hook to pay Vision Fund pref holders 7% annually irrespective of Vision Fund actual return. Which might be an issue if/when Vision fund does not return 7% (what if it returns -20%?). I don't know all the legalities of this and how Softbank has to cover this and can they refuse to pay without hurting Softbank itself. IMO though, any Softbank analysis has to understand the Vision Fund pref situation in depth.

Barron's on the past weekend had an article about this too. The market is effectively valuing Vision Fund at -50B.


Jurgis

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Re: 9984 - Softbank
« Reply #161 on: September 24, 2019, 08:10:03 AM »
@thepupil: I think a lot hinges on the Vision Fund preferred shares payout. It seems that Softbank is on the hook to pay Vision Fund pref holders 7% annually irrespective of Vision Fund actual return. Which might be an issue if/when Vision fund does not return 7% (what if it returns -20%?). I don't know all the legalities of this and how Softbank has to cover this and can they refuse to pay without hurting Softbank itself. IMO though, any Softbank analysis has to understand the Vision Fund pref situation in depth.

Barron's on the past weekend had an article about this too. The market is effectively valuing Vision Fund at -50B.

I read Barron's article. I don't think it covered the Vision Fund pref issue. Although I cannot access the WSJ article UK has posted, the excerpt seems to cover the problems with prefs more than Barron's did.

I am not denying that SOPT looks good. And I don't have a number to put on as Vision pref negative SOPT adjustment.  ::)
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SharperDingaan

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Re: 9984 - Softbank
« Reply #162 on: September 24, 2019, 08:23:37 AM »
Softbank needs the Unicorn bubble to hold up; few think that's going to happen, hence the 110B cut to NAV.
If anything, the .com implosion evidenced that tech bubble corrections overshoot by quite a bit. Hence, when anything to do with unicorns becomes radioactive - it's hard to see how Softbank doesn't drop at least another 40-60% percent from current levels.

However, the .com implosion also evidenced that there is real value-add in these bubbles - it's just not very much, and very scattered.
A Softbank is more likely to get consolidated, versus liquidated; and recapitalized from the 'funny money', made on the way down. A thrill-seeking ride, but perhaps not for everyone.

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thepupil

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Re: 9984 - Softbank
« Reply #163 on: September 24, 2019, 09:40:57 AM »
https://www.ft.com/content/b6fe313a-4add-11e7-a3f4-c742b9791d43

This article says that the Vision Fund's external investor invested through a combination of preferred and common, whereas Softbank Group invested solely through common equity.

This would increase the probability that Softbank Group experiences severe writedowns in its common interest in the Vision Fund and also somewhat cushion Saudi et al from writedowns to a certain degree. From my reading it does not encumber Softbank Group with a liability, it simply makes Softbank's interest int he Vision Fund (13% of assets or whatever, according to the presentation) more levered.

I view this as risk reducing smart financing on the part of Softbank that scales the size of the fund and limits their dollars they ahve to risk.


I'm only really starting to dig into this, but I feel like this will start to become assymetric with incremental moves down, continued indication of capital impairment in WeWork, etc.

Spekulatius

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Re: 9984 - Softbank
« Reply #164 on: September 24, 2019, 11:29:01 AM »
I would also add that BABA itself is a black box with enough yellow flags to make me stay away as far as possible . The complexity of their balance sheet  is mindboggling. Now with Jack Ma gone and the party having a good say and what is happening, I don’t think it can be valued easily. It’s not like Mr. Market has never been wrong on Chinese companies before.
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UK

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Re: 9984 - Softbank
« Reply #165 on: September 26, 2019, 01:29:27 AM »
https://www.wsj.com/articles/softbank-backed-real-estate-broker-compass-hit-by-high-level-exits-11569439433

“Generally speaking, people join these companies in large part for the wealth creation that an IPO brings,” said Jack Micenko, a senior analyst at trading and tech firm Susquehanna International Group. “To the extent that anyone in a senior position at one of these startups leaves prior to an IPO, [it] is somewhat unusual.”

The startup has a valuation of more than $6.4 billion, or about nine times the size of the market capitalization of Realogy, a publicly traded company that owns the brokers Corcoran Group and Sotheby’s International Realty among other real estate brands. Like We, Compass has sought to make a case that it is more of a tech startup than a real-estate company. The residential broker has long said it would develop an “end-to-end” technology platform to facilitate real-estate transactions, handling everything from searching for a property to securing title and home insurance. At one point, Compass touted its plans for an interactive sale sign illuminated by LED to make it visible on lawns at night. “Compass is just Realogy with better branding,” said Mike DelPrete, a scholar in residence on real-estate technology at the University of Colorado Boulder.

Mr. Rein has said that near-term profitability isn’t a priority. “Investors now have an incredible long-term view—20, 30, 40 years…They’re saying, ‘Who can build something that people love?’” he said in an April interview with The Wall Street Journal. In that same interview, Ms. Gavet said the company didn’t have a clear strategy to monetize the business. “We just know that there’s definitely going to be a business model behind these things given how much money is in this industry,” she said.

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cherzeca

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Re: 9984 - Softbank
« Reply #167 on: October 31, 2019, 11:06:22 AM »
couple vignettes:

1. from 10/31 WSJ. "Flying over Europe in a private jet last year, Rajeev Misra [head of VF] took his shoes off and propped his bare feet on the knee of a top executive of FIFA, soccer’s governing body. The executive froze while Mr. Misra, head of SoftBank Group Corp. 9984 3.71% ’s $100 billion Vision Fund, chatted about ways to make more money off the streaming rights for the organization’s tournaments."

misra is an ex-banker.  anybody who has worked at an investment bank or biglaw firm knows this is a dominance game played by midlevel bankers and lawyers...you come to a colleague's office, sit in chair opposite desk, put your feet up on his desk, and chat.  you would never do this to a senior or mentor, though they might do it to you, but you would do it to someone just above or below you, as if in peacock display.

that Misra would do a bare feet on leg dominance display to a top executive shows to me the guy is out of his friggin mind.

2.  someone I know who covers the public RE brokers was asked to give a talk to VF individuals who, as it was represented, were responsible for VF investment in Compass.  long story short, the VF individuals had no clue what they were doing or what the prospects for large RE brokerages were.  talk to the hand, in essence
« Last Edit: October 31, 2019, 11:24:45 AM by cherzeca »

Value^2

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Re: 9984 - Softbank
« Reply #168 on: October 31, 2019, 11:38:51 AM »

thepupil

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Re: 9984 - Softbank
« Reply #169 on: February 11, 2020, 05:58:12 AM »
Softbank is up 8% or so year to date and about 20% from its October 2019 1 year low, but there have been some interesting developments lately

1) Elliott bought $2.5 billion of the shares (neutral to positive, not a negative)

http://thejewishvoice.com/2020/02/paul-singers-nyc-hedge-fund-collects-3b-stake-in-softbank/
https://www.wsj.com/articles/elliott-push-at-softbank-reflects-rise-of-shareholder-activism-in-japan-11581341934
https://www.barrons.com/articles/elliott-managements-plan-to-fix-softbank-51581120898
https://www.ft.com/content/236917e0-4973-11ea-aeb3-955839e06441

2) Sprint / T-Mobile Approved; given that 9984 owns 83% of Sprint and the stock is up 70% or whatever, this is clear positive.

The quantum of the above two developments may be overshadowed by coronavirus and its impact on the most important holding, Alibaba, though BABA / 9988 have been remarkably resilient.

Still $100 billion market cap for $200 billion+ of risk assets with angry Elliott in the mix and the leading e-commerce company in China is pretty enticing.

might buy a little, tail hedged of BABA (ie buy $100 of Softbank and for every $100 buy $100 notional of 30% OTM long term puts on BABA for like $5-$6