Japan) net of debt exceeded the market capitalization of Softbank by $100 billion.

Finally, my biggest achievement – well actually second biggest; I count quitting smoking in 1992 as the biggest – I’ve authored the Little Book of Sideways Markets (Wiley, 2010) and Active Value Investing (Wiley, 2007).Dear friends,I'm delighted to announce that Jag Sriram has joined the fund as a Senior Vice President. So, if it’s liquidated, you should receive more than the current price of your shares.

Even when we sold it, it was still trading at a significant discount to the fair value of its assets, even if Softbank’s share in Vision Fund 1 was worth zero.We have plenty of cash in our portfolios, so we did not sell it to buy something else.However, in light of recent developments we started to question the A few months ago, Masayoshi Son announced a new, even larger fund – Vision Fund 2. I suspect that Softbank will be selling its stake in T-Mobile–Sprint once the deal is done. I met the Buddha and killed him, at least for now.To understand why we sold it, you need to understand why we bought it. At first, our clients thought Softbank was a bank. I figured the best way to learn is to teach. (Sprint’s debt would become T-Mobile’s debt.)

WeWork is to us a real estate company that borrows long-term by buying office real estate or entering into office leases, and lends short-term by breaking large office spaces into small offices and leasing them out fully furnished for periods ranging from days to months.My firm spent a lot of time analyzing WeWork’s competitor IWG (which used to be known as Regus) a few years ago. If Softbank’s debt skyrockets, a 50% discount to fair value will become a permanent feature of Softbank stock. WeWork's Neumann sues SoftBank over scuttled stock deal - report SA Breaking News 05/04 18:30 ET. (Alibaba’s stock and its earnings went up, and Japan Telecom went public at a higher valuation than we expected).In our models, even if we took down the value of Softbank’s equity investment in the Vision Fund from $25 billion to zero, the stock was still significantly undervalued. And with a free three-day trial and $29.99 per month thereafter, it’s a value in its own right.© Copyright 2018 ValueWalkPremium. Print Image Since Sprint was an equity investment, if it went bankrupt Softbank would not be responsible for Sprint’s debt. The book value is essentially the tangible accounting value of a firm compared to the market value that is shown.

Enter Vision Fund 1, Mr. Son’s $100 billion bet on the Singularity – a version of the future where computer intelligence surpasses human intelligence. Especially when it comes to discounts. But having an added margin of safety is a good thing. If Softbank’s debt skyrockets, a 50% discount to fair value will become a permanent feature of Softbank stock. Most of Softbank’s assets (with the exception of Japan Telecom) were public, and thus it was easy to value them. I was profiled in Barron’s, and have been interviewed by Value Investor Insight, Welling@Weeden, BusinessWeek, BNN, CNBC, and countless radio shows.

(Alibaba’s stock and its earnings went up, and Japan Telecom went public at a higher valuation than we expected).In our models, even if we took down the value of Softbank’s equity investment in the Vision Fund from $25 billion to zero, the stock was still significantly undervalued.The truth is that my firm is not as big a fan of WeWork as is Softbank’s CEO and Chairman, Masayoshi Son. Its founder Masayoshi Son said on a recent visit that the group's commitment of pumping $10 billion into … This will alert our moderators to take actionTheme now is value creation, not valuation: Deep Nishar, MD, SoftBankCopyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved.

And then there was also Masayoshi Son, Softbank’s charismatic founder, whom I described as a guy who embodied the investment prowess of Warren Buffett, Richard Branson’s daring and grit in competing against Goliaths, and Steve Jobs’ vision of the future. We respect your privacy.ValueWalk Premium is for investors looking to improve their investment process AND keep up-to-date on the latest industry trends.It’s THE resource for value investing and hedge funds. If WeWork is really worth $8 billion, I’d suggest that IWG management install beer fountains and ping pong tables and forgo profitability. This is a classic high-fixed-cost business with variable and cyclical revenues.

I wrote about my concern with its funding (Softbank is contributing $38 billion to the second fund – a large sum of money even for Softbank. I met the Buddha and killed him, at least for now.To understand why we sold it, you need to understand why we bought it. (They included Alibaba and Yahoo! Japan Telecom has its own problem – in a year it will have a new competitor that may pressure its profitability – so we reduced our earnings assumptions and thus our valuation of that business.

To do this we need to detach ourselves from our beliefs and examine them, and if we are wrong then we must have the mental strength to admit that we are wrong, learn, and move on.Softbank has been a very successful investment for our firm. Finally, part of our “Softbank’s true indebtedness is misunderstood” thesis was based on Softbank’s selling Sprint and improving the optics of its balance sheet, thus narrowing its discount to fair value. Son has built Softbank from nothing into a company with a $100 billion market cap. Though Softbank’s large discount to fair value could afford seeing the first fund do poorly, we won’t have that luxury if both funds collapse… We’ll be looking very carefully to see where Softbank gets this money and how the deal is structured. Nifty’s premium which was earlier in the range of 20-30 has now narrowed to 5-10, while Banknifty has shifted from a premium of 50-100 to a discount of 85-100 pointing at backwardation.

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