We bought Softbank when it was an unknown company to US investors. In a move that most investment firms would love to have, Jana partners  raked in profits from its investment with Barnes & Noble, Inc. (NYSE: BKS), in a one day... Recap from March’s Picks 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. Since Sprint was an equity investment, if it went bankrupt Softbank would not be responsible for Sprint’s debt. I am Chief Investment Officer at Investment Management Associates, Inc (IMA), a value investment firm based in Denver, Colorado. Japan) net of debt exceeded the market capitalization of Softbank by $100 billion. They are among the very few that pass my screen. If Softbank’s debt skyrockets, a 50% discount to fair value will become a permanent feature of Softbank stock. Throughout our ownership, despite its appreciation, Softbank stock always traded at a discount to its fair value. Print Image If WeWork is really worth $8 billion, I’d suggest that IWG management install beer fountains and ping pong tables and forgo profitability. They track the changes on a weekly basis and are now planning to step up efforts to close the value gap, according to a … The sale of Sprint would not be enough to fund Vision Fund 2. However, a few weeks ago we sold our Softbank stock. If the utilization drops to, let’s say, 60%, then it will start losing money and implode. (They included Alibaba and Yahoo! At first I taught an undergraduate class at the University of Colorado at Denver and later a graduate investment class at the same university that I designed based on my day job. Son had an incredible investment track record, and the gap between the value of Softbank’s assets and where the stock was trading had widened.

However, a few weeks ago we sold our Softbank stock. Throughout our ownership, despite its appreciation, Softbank stock always traded at a discount to its fair value. After I received my graduate and undergraduate degrees in finance (cum laude, but who cares) from the University of Colorado at Denver, and finished my CFA designation (three years of my life that are a vague recollection at this point), I wanted to keep learning. This is one of the reasons why Softbank took Japan Telecom public.I hoped that the WeWork debacle would cool down Mr. Son’s ambitions for Vision Fund 2.

We have plenty of cash in our portfolios, so we did not sell it to buy something else. My concern now is that any shortfall of outside capital for the fund will be filled by Softbank. The sceptic inside of me had some reservations about the sheer size of the fund, but Mr. I thought I’d own this stock for decades. I really don’t know if WeWork can be saved; but if anyone can do it, it will be Mr. Throughout our ownership, despite its appreciation, Softbank stock always traded at a discount to its fair value. This is a classic high-fixed-cost business with variable and cyclical revenues.This quote by F. Scott Fitzgerald has been very useful to me lately: “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.”And hold opposing ideas I did.

(We sold it as soon as we learned that it would try the bailout). 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. Son had an incredible investment track record, and the gap between the value of Softbank’s assets and where the stock was trading had widened. WeWork directors seek right to continue SoftBank fight SA Breaking News 05/11 15:58 ET. Let’s look at our sell decision through this lens. At the time we were buying a proverbial dollar for 40 cents. Sprint’s debt was consolidated on Softbank’s balance sheet, and thus it made Softbank look overleveraged.

Or third, things change. It looks like I was wrong. The company is known for its leadership by founder Masayoshi Son. 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. The mysterious nature of when and why closed-end funds trade at either a discount or premium can often confound investors. Second, we find something more attractive with a better risk-adjusted return. Our Most Attractive Stocks (-4.5%) outperformed the S&P 500 (-5.3%) as a long portfolio last month. Mr. I suspect that Softbank will be selling its stake in T-Mobile–Sprint once the deal is done. They could instantly double shareholder value.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.

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