ScottHall Posted August 27, 2015 Share Posted August 27, 2015 I bought this one off of like two hours of research, but the way I see it, a lot of the value isn't necessarily in the big holdings today. Those provide a floor, so to speak, but the part I'm interested in is future capital allocation. I basically view Softbank as a (historically very successful) VC firm, and I'm happy to partner up for the long haul. Maybe this will prove to be a mistake, but I like the odds. They kind of stopped doing that: http://www.livemint.com/Companies/rCVHvx2GglnyKdVDhcpkPI/SoftBank-to-shut-down-venture-capital-arm-report.html I don't really think so. Maybe our definitions of VC are different. After shutting its VC unit, SoftBank will invest directly in late stage start-ups, Link to comment Share on other sites More sharing options...
muscleman Posted August 27, 2015 Share Posted August 27, 2015 Sold out of SFTBY at about a 10% loss, however money got put into other positions that are down similar or greater amounts. BABA is such a large part of the story that it is scary to hold this with what is going on in China and even with the existing decline in BABA, the sftby price makes a lot less sense. I am also not bullish on Sprint so there is not enough left to justify holding it. BABA's Taobao and Tmall business will be much larger five years from now regardless of whether China goes into a recession or not as the migration of common folk's everyday purchasing from offline to online is still on-going and well and for many small businesses Taobao is still be the only viable destination to sell to masses across the country. The thing I would really need to make sure is just what price I pay for the stock and what goes into my valuation equation as I think exchange rate and discretionary income growth rate are now much harder to predict than a year ago. Also, I think competition is building in the B2C business and it's totally possible that Tmall will lose share in the long run to JD and the likes. The worst case scenario to me is that Taobao becomes marginalized like eBay by someone like JD.com, so that people only shop for niche goods on Taobao or even Tmall. Now I don't think that will happen, based on what I know about Chinese consumer preferences. Could you please tell me a bit about Chinese consumer preferences? Link to comment Share on other sites More sharing options...
muscleman Posted August 27, 2015 Share Posted August 27, 2015 I bought this one off of like two hours of research, but the way I see it, a lot of the value isn't necessarily in the big holdings today. Those provide a floor, so to speak, but the part I'm interested in is future capital allocation. I basically view Softbank as a (historically very successful) VC firm, and I'm happy to partner up for the long haul. Maybe this will prove to be a mistake, but I like the odds. They kind of stopped doing that: http://www.livemint.com/Companies/rCVHvx2GglnyKdVDhcpkPI/SoftBank-to-shut-down-venture-capital-arm-report.html I don't really think so. Maybe our definitions of VC are different. After shutting its VC unit, SoftBank will invest directly in late stage start-ups, It seems to me that they stopped investing in early stage startups, but they still make big invests in bigger sized startups. Link to comment Share on other sites More sharing options...
no_free_lunch Posted August 27, 2015 Share Posted August 27, 2015 I bought this one off of like two hours of research, but the way I see it, a lot of the value isn't necessarily in the big holdings today. Those provide a floor, so to speak, but the part I'm interested in is future capital allocation. I basically view Softbank as a (historically very successful) VC firm, and I'm happy to partner up for the long haul. Maybe this will prove to be a mistake, but I like the odds. I was in a similar situation, I probably did more like 3 hours of research though :). The thing at current BABA prices the floor could easily be below current price. If you look at BABA valuation it could still lose another 50% (not saying it will) if there is concern for it's growth. Even if it doesn't if sprint were to go into bankruptcy, applying a holding company discount the floor of softbank could be substantially lower than it is today. I bought in as well for the CEO's capital allocation skills and because with a very high BABA price I felt there was a large buffer or floor if you like. I just feel like that floor has been pulled out at this point. If BABA were to tank and SFTBY with it, I would very much like to get back in. Link to comment Share on other sites More sharing options...
ccap Posted August 27, 2015 Share Posted August 27, 2015 I frequently see comments about how great the Softbank CEO is at capital allocation. From my brief look at the security, it looks like the returns thus far have been from Alibaba, Yahoo Japan, and the Japanese telco turn around. All three were lottery ticket scenarios that could have gone either way -- I assume most of the venture investments to date have gone to zero. For a CEO that consistently invests in lottery tickets -- and most of his returns have resulted from the lottery tickets -- how do you differentiate between luck and skill? Link to comment Share on other sites More sharing options...
muscleman Posted August 28, 2015 Share Posted August 28, 2015 I frequently see comments about how great the Softbank CEO is at capital allocation. From my brief look at the security, it looks like the returns thus far have been from Alibaba, Yahoo Japan, and the Japanese telco turn around. All three were lottery ticket scenarios that could have gone either way -- I assume most of the venture investments to date have gone to zero. For a CEO that consistently invests in lottery tickets -- and most of his returns have resulted from the lottery tickets -- how do you differentiate between luck and skill? Their presentation says that most of their +1 billion investments have been doing well except RenRen. I think that's probably why they decided to stop investing in very early stage companies. Probably most have gone to zero. Link to comment Share on other sites More sharing options...
ScottHall Posted August 28, 2015 Share Posted August 28, 2015 I frequently see comments about how great the Softbank CEO is at capital allocation. From my brief look at the security, it looks like the returns thus far have been from Alibaba, Yahoo Japan, and the Japanese telco turn around. All three were lottery ticket scenarios that could have gone either way -- I assume most of the venture investments to date have gone to zero. For a CEO that consistently invests in lottery tickets -- and most of his returns have resulted from the lottery tickets -- how do you differentiate between luck and skill? Power laws, aren't they amazing? Link to comment Share on other sites More sharing options...
no_free_lunch Posted August 28, 2015 Share Posted August 28, 2015 The way I understand it, the CEO is a self made millionaire who then became a self-made billionaire. This all happened in the 80's & 90's. During this period, amongst other investments he co-founded Yahoo Japan which is now a $23B company. By 2000 he built softbank to a company similar in size to that of today (if memory serves) at which point the stock got completely pummeled in the crash. I think he was down 75%+. You could count this against him, but holding is just kind of how he operates for the most part. I don't know, it is what it is, it will be bumpy investing with him. He continued to invest and made other investments, including BABA. BABA amongst others was a huge hit. So he has made money and lost money or numerous occasions. I think what he accomplished leading up to 2000, that alone would qualify him as more than lucky. However, if you throw in the gigantic success of Ali Baba I think it's hard to say it's just luck. Link to comment Share on other sites More sharing options...
frank Posted August 29, 2015 Share Posted August 29, 2015 Sold out of SFTBY at about a 10% loss, however money got put into other positions that are down similar or greater amounts. BABA is such a large part of the story that it is scary to hold this with what is going on in China and even with the existing decline in BABA, the sftby price makes a lot less sense. I am also not bullish on Sprint so there is not enough left to justify holding it. BABA's Taobao and Tmall business will be much larger five years from now regardless of whether China goes into a recession or not as the migration of common folk's everyday purchasing from offline to online is still on-going and well and for many small businesses Taobao is still be the only viable destination to sell to masses across the country. The thing I would really need to make sure is just what price I pay for the stock and what goes into my valuation equation as I think exchange rate and discretionary income growth rate are now much harder to predict than a year ago. Also, I think competition is building in the B2C business and it's totally possible that Tmall will lose share in the long run to JD and the likes. The worst case scenario to me is that Taobao becomes marginalized like eBay by someone like JD.com, so that people only shop for niche goods on Taobao or even Tmall. Now I don't think that will happen, based on what I know about Chinese consumer preferences. Sold out of SFTBY at about a 10% loss, however money got put into other positions that are down similar or greater amounts. BABA is such a large part of the story that it is scary to hold this with what is going on in China and even with the existing decline in BABA, the sftby price makes a lot less sense. I am also not bullish on Sprint so there is not enough left to justify holding it. BABA's Taobao and Tmall business will be much larger five years from now regardless of whether China goes into a recession or not as the migration of common folk's everyday purchasing from offline to online is still on-going and well and for many small businesses Taobao is still be the only viable destination to sell to masses across the country. The thing I would really need to make sure is just what price I pay for the stock and what goes into my valuation equation as I think exchange rate and discretionary income growth rate are now much harder to predict than a year ago. Also, I think competition is building in the B2C business and it's totally possible that Tmall will lose share in the long run to JD and the likes. The worst case scenario to me is that Taobao becomes marginalized like eBay by someone like JD.com, so that people only shop for niche goods on Taobao or even Tmall. Now I don't think that will happen, based on what I know about Chinese consumer preferences. Right, this is really the sad thing about China as its brick-and-mortar retail landscape is not as well-developed as the U.S. and H.K. and so Taobao, JD and others have become the better alternative for folks to shop for goods. However, the thing I do worry about Taobao is that since it's a regulated marketplace with millions of buyers and sellers, how would you trust somebody who sell you higher-priced items such as a fridge or a smartphone or things that you eat and drink when you can find the same/similar good that you can trust from a reputable seller such as JD or YHD.com (which is now owned by Wal-Mart) for the same price? Remember, in China, trust means a lot to consumers and I am pretty sure that you would somehow agree if you are there. So this is why I think Taobao and Tmall will grow with the overall market but it's mkt share will be slowly taken by niche players and those with a more integrated and trusted supply chain. That being said, I think my concerns are still a few years away from really causing a real dent to BABA's core businesses and probably shouldn't give anyone a pause to purchase BABA at the right price. Link to comment Share on other sites More sharing options...
muscleman Posted September 11, 2015 Share Posted September 11, 2015 http://www.bloomberg.com/news/articles/2015-09-11/softbank-chairman-said-to-have-considered-taking-company-private Do you think this is real? Link to comment Share on other sites More sharing options...
phil_Buffett Posted November 27, 2015 Share Posted November 27, 2015 http://www.economist.com/news/business/21678237-masayoshi-son-has-always-bounced-back-setbacks-his-latest-big-moves-are-raising Link to comment Share on other sites More sharing options...
Jurgis Posted November 27, 2015 Share Posted November 27, 2015 http://www.economist.com/news/business/21678237-masayoshi-son-has-always-bounced-back-setbacks-his-latest-big-moves-are-raising Good article from Economist (par for the course - most of their articles are good). Although Softbank might be cheap based on SoTP, Sprint is a concern and so is Alibaba (to me - others might consider Alibaba great company). New investments are possibly made at inflated prices. Not counting Japanese telecom business, I don't particularly see what Softbank/Son provides. If I compare it to Malone, I see Malone's investments being 1+1 = 3. With Softbank, I see more of 1 + 1 = 1.5 at best... Perhaps I don't have long term view, but I am skeptical. Link to comment Share on other sites More sharing options...
muscleman Posted November 27, 2015 Share Posted November 27, 2015 http://www.economist.com/news/business/21678237-masayoshi-son-has-always-bounced-back-setbacks-his-latest-big-moves-are-raising Good article from Economist (par for the course - most of their articles are good). Although Softbank might be cheap based on SoTP, Sprint is a concern and so is Alibaba (to me - others might consider Alibaba great company). New investments are possibly made at inflated prices. Not counting Japanese telecom business, I don't particularly see what Softbank/Son provides. If I compare it to Malone, I see Malone's investments being 1+1 = 3. With Softbank, I see more of 1 + 1 = 1.5 at best... Perhaps I don't have long term view, but I am skeptical. The churn rate in Sprint is still dropping. They got more customers signing on postpaid plans each month. They started the sale leaseback deals with MLS which is setup by Softbank. This will relieve their cash stress. I haven't done any projections to see how many more customers they have to have in order to make the high fixed costs viable though. I should dig more into their financials. Link to comment Share on other sites More sharing options...
muscleman Posted January 25, 2016 Share Posted January 25, 2016 https://www.sec.gov/Archives/edgar/data/101830/999999999715015958/filename1.pdf Why would softbank ask the court to treat its ownership of Sprint as confidential? Link to comment Share on other sites More sharing options...
fareastwarriors Posted June 6, 2016 Share Posted June 6, 2016 SoftBank is selling almost all of its shares in games firm GungHo for $685M http://techcrunch.com/2016/06/06/softbank-is-selling-almost-all-of-its-shares-in-games-firm-gungho-for-685m/ China’s Tencent Seeks to Buy Majority Stake in ‘Clash of Clans’ Maker Supercell Chinese Internet firm’s discussions with Japan’s SoftBank are still at early stage http://www.wsj.com/articles/tencent-in-talks-with-softbank-for-majority-stake-in-clash-of-clans-maker-supercell-1463987609 Link to comment Share on other sites More sharing options...
Oreo Posted June 9, 2016 Share Posted June 9, 2016 http://www.economist.com/news/business/21678237-masayoshi-son-has-always-bounced-back-setbacks-his-latest-big-moves-are-raising Good article from Economist (par for the course - most of their articles are good). Although Softbank might be cheap based on SoTP, Sprint is a concern and so is Alibaba (to me - others might consider Alibaba great company). New investments are possibly made at inflated prices. Not counting Japanese telecom business, I don't particularly see what Softbank/Son provides. If I compare it to Malone, I see Malone's investments being 1+1 = 3. With Softbank, I see more of 1 + 1 = 1.5 at best... Perhaps I don't have long term view, but I am skeptical. I've briefly looked at Softbank twice, but I never was able to get over the sense that it is a ticking time bomb. Link to comment Share on other sites More sharing options...
fareastwarriors Posted July 13, 2016 Share Posted July 13, 2016 SoftBank: Waiting for the next ‘big idea’ Masayoshi Son has cashed in investments and lost his successor — where now for the Japanese group? http://www.ft.com/cms/s/0/213582f2-453e-11e6-9b66-0712b3873ae1.html#axzz4E9C5mUS1 Link to comment Share on other sites More sharing options...
Guest ajc Posted July 14, 2016 Share Posted July 14, 2016 SoftBank: Waiting for the next ‘big idea’ Masayoshi Son has cashed in investments and lost his successor — where now for the Japanese group? http://www.ft.com/cms/s/0/213582f2-453e-11e6-9b66-0712b3873ae1.html#axzz4E9C5mUS1 It's a decent article and I agree with their take on the stylistic differences between Son and Arora, but some points: - The FT reported 2 weeks ago that the sale of those holdings was being done to reduce debt and improve their credit rating, now they're saying it's for an acquisition. Softbank hasn't commented either way. It also refers to the group as heavily indebted, but at no point notes that Sprint's is consolidated, non-recourse debt. - Softbank have sold down all their entertainment holdings (Supercell, GungHo, and Legendary), so if you were speculating you might as well guess that an acquisition will be related to ride-sharing (Ola, Grab, and Didi), e-commerce (Coupang, Snapdeal, Grofers, and Tokopedia), robotics (Pepper), or clean energy infrastructure (Softbank Energy and SBG Cleantech). Or, at least discuss Yahoo Japan.... - Finally, if you do any research on Softbank's investments you'd probably name Oyo Rooms, Grab, Ola & Coupang over Snapdeal, Didi & SoFi. Some fundamental analysis on Softbank's ownership stake's, management quality at those businesses, competitive positioning within their industries, and structural factors within the Indian, ASEAN, and Korean economies lends to that conclusion. I'm a fan of the FT, but I don't think there's much here from a fundamental investment perspective. Sad! Link to comment Share on other sites More sharing options...
Peregrine Posted July 14, 2016 Share Posted July 14, 2016 http://www.economist.com/news/business/21678237-masayoshi-son-has-always-bounced-back-setbacks-his-latest-big-moves-are-raising Good article from Economist (par for the course - most of their articles are good). Although Softbank might be cheap based on SoTP, Sprint is a concern and so is Alibaba (to me - others might consider Alibaba great company). New investments are possibly made at inflated prices. Not counting Japanese telecom business, I don't particularly see what Softbank/Son provides. If I compare it to Malone, I see Malone's investments being 1+1 = 3. With Softbank, I see more of 1 + 1 = 1.5 at best... Perhaps I don't have long term view, but I am skeptical. Just wondering - how do you come to these conclusions? Link to comment Share on other sites More sharing options...
Jurgis Posted July 14, 2016 Share Posted July 14, 2016 http://www.economist.com/news/business/21678237-masayoshi-son-has-always-bounced-back-setbacks-his-latest-big-moves-are-raising Good article from Economist (par for the course - most of their articles are good). Although Softbank might be cheap based on SoTP, Sprint is a concern and so is Alibaba (to me - others might consider Alibaba great company). New investments are possibly made at inflated prices. Not counting Japanese telecom business, I don't particularly see what Softbank/Son provides. If I compare it to Malone, I see Malone's investments being 1+1 = 3. With Softbank, I see more of 1 + 1 = 1.5 at best... Perhaps I don't have long term view, but I am skeptical. Just wondering - how do you come to these conclusions? Which conclusions? Leaving Malone out, here are pros and cons for Softbank: Pros: - Son's Japan telecom business (past?) - Son's investment in a bunch of successful unicorn like companies in the past (Alibaba, Yahoo Japan, etc.) - Maybe still cheap at SoTP - I did not look recently Cons: - Sprint is a mess (still?) - Alibaba and possibly other old positions are overvalued (arguable, people might think differently) - New unicorn-like positions are bought at the height of unicorn valuations. I doubt they will work out as well as Alibaba did, but that's just a generic observation. I might be wrong. - Arora mess (highlighting some thrashing at the top in terms of future strategy) I will admit that I have not spend much time recently on various pieces of Softbank, so you might have different view of the company and its holdings. If you believe Son is still in top shape and company's progress is fine, then it might be a good investment that will bring good returns. Not for me though. Link to comment Share on other sites More sharing options...
Peregrine Posted July 15, 2016 Share Posted July 15, 2016 http://www.economist.com/news/business/21678237-masayoshi-son-has-always-bounced-back-setbacks-his-latest-big-moves-are-raising Good article from Economist (par for the course - most of their articles are good). Although Softbank might be cheap based on SoTP, Sprint is a concern and so is Alibaba (to me - others might consider Alibaba great company). New investments are possibly made at inflated prices. Not counting Japanese telecom business, I don't particularly see what Softbank/Son provides. If I compare it to Malone, I see Malone's investments being 1+1 = 3. With Softbank, I see more of 1 + 1 = 1.5 at best... Perhaps I don't have long term view, but I am skeptical. Just wondering - how do you come to these conclusions? Which conclusions? Leaving Malone out, here are pros and cons for Softbank: Pros: - Son's Japan telecom business (past?) - Son's investment in a bunch of successful unicorn like companies in the past (Alibaba, Yahoo Japan, etc.) - Maybe still cheap at SoTP - I did not look recently Cons: - Sprint is a mess (still?) - Alibaba and possibly other old positions are overvalued (arguable, people might think differently) - New unicorn-like positions are bought at the height of unicorn valuations. I doubt they will work out as well as Alibaba did, but that's just a generic observation. I might be wrong. - Arora mess (highlighting some thrashing at the top in terms of future strategy) I will admit that I have not spend much time recently on various pieces of Softbank, so you might have different view of the company and its holdings. If you believe Son is still in top shape and company's progress is fine, then it might be a good investment that will bring good returns. Not for me though. I was just wondering about your rationale. Malone and Son have very, very different approaches. Softbank is more of a venture capital type company than any of Malone's companies. What may seem like pricey acquisitions may in due time turn out to be incredible winners - or more likely they will be duds. But the thing about VC is that you only need a handful of big wins to have a great track record. At the very least, Son has that so far. As far as what the future may behold, no conclusions can be drawn. At the very least, the stock appears to be fairly undervalued at this current point in time. Also, I have no position in Alibaba but if forced to choose, I would definitely NOT be betting against it. Link to comment Share on other sites More sharing options...
Jurgis Posted July 15, 2016 Share Posted July 15, 2016 I was just wondering about your rationale. Malone and Son have very, very different approaches. Softbank is more of a venture capital type company than any of Malone's companies. I'm gonna end this discussion since I really don't know Softbank too much and I don't have time or inclination to dig deeper, but I disagree with the above. Softbank's Japan telco business and Sprint is very similar to Malone's businesses. With these being a big chunk of Softbank IMHO you can't call it VC business since a large part of your returns are not coming from VC. Even the Alibaba and Yahoo Japan holdings are arguably no longer VC-like business since the companies are huge and it's not very VC like to have large parts of capital in huge public companies. I could also argue that Malone also holds positions in Trip Advisor, Expedia and a bunch of startupy companies. But anyway, I don't care. Have fun and good luck. :) Link to comment Share on other sites More sharing options...
Foreign Tuffett Posted July 16, 2016 Share Posted July 16, 2016 I have a tremendous amount of respect for Masayoshi Son. However, the Nikesh Arora situation was a complete debacle. Anyone long Softbank should make sure they are comfortable with Alibaba and why the short case is wrong. Link to comment Share on other sites More sharing options...
fareastwarriors Posted July 18, 2016 Share Posted July 18, 2016 Japan’s Softbank to buy chip-design powerhouse ARM for $32 billion http://www.cnbc.com/2016/07/17/ Link to comment Share on other sites More sharing options...
rogermunibond Posted July 18, 2016 Share Posted July 18, 2016 Maybe the company needs a new moniker too. Like Hardbank. Link to comment Share on other sites More sharing options...
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