SoftBank: A Cheap Way To Buy Great Companies

Core Viewpoint - SoftBank Group Corp. presents a strong investment opportunity due to its significant discount on NAV per share, potential returns from private tech investments, and an active share buyback program, allowing investors to buy shares at a 55% discount, particularly considering valuable assets like ARM and telecom holdings [21][39]. Group 1: Investment Opportunity - SoftBank has lost 15% of its value in the last month, reaching a peak of 30% on August 5th, creating a potential investment opportunity due to a high discount over its NAV per share [21]. - The current NAV per share is estimated at ¥24,068 ( $165.6), while the current share price is ¥8,529 ($ 58.7), indicating a considerable discount [24][25]. - The company has initiated a share buyback program, which can further boost the share price [21][30]. Group 2: Asset Valuation - SoftBank's total NAV is estimated at ¥35.28 trillion ( $242.8 billion), with key assets including Arm Holdings valued at$ 144.6 billion and SoftBank Vision Funds valued at $56.6 billion combined [24]. - The estimated discount on NAV per share is around 55%, with a conservative target price of ¥12,066, representing a 41% premium over the current price [26][32][33]. - The conglomerate discount for SoftBank is estimated to be less than 20%, given its focus on technology and AI [32]. Group 3: Private Investment Access - Through its Vision Funds, SoftBank provides access to private technology companies that may not be available to individual investors, with high growth expectations from companies like Alibaba and Grab Holdings [28][29]. - Investing in SoftBank allows exposure to a diversified portfolio of high-potential tech companies, effectively acquiring these investments at a discount [29]. Group 4: Share Buyback Program - SoftBank's share buyback history includes a$ 5.5 billion buyback in 2019, an $18 billion buyback in 2020, a$ 9 billion buyback in 2021, and a $3.5 billion buyback in 2024, reflecting a strategic response to market conditions [30][31]. - The buyback programs have historically led to temporary boosts in stock prices, indicating a commitment to enhancing shareholder value [30]. Group 5: Risks and Challenges - SoftBank faces risks related to capital allocation decisions, particularly in its venture capital investments, which have shown mixed results [34]. - The company is not invested in leading AI platforms, which could limit its growth potential in the AI sector [35]. - Currency risk is also a factor, as fluctuations in the yen can impact investment returns [36].