There seems to be no end to the ambition of Masayoshi Son the Chairman and CEO of SoftBank Group. Yesterday the Nikkei Asian Review reported that, only a few weeks after establishing the world’s largest technology fund, the $100 billion Softbank Vision Fund, Son is planning to create a successor.
“The Vision Fund was just the first step, 10 trillion yen ($88 billion) is simply not enough,” Son told The Nikkei. “We will briskly expand the scale. Vision Funds 2, 3 and 4 will be established every two to three years.”
It seems that Son is planning to establish multiple funds to keep cash flowing into tech startups. The Softbank founder believes that the first fund will probably run dry in about two years, after which new funds will be required. All told, the funds “will probably have invested in at least 1,000 companies within ten years,” Son declared in his interview after speculating that he wants to jack up funding to as much as 100 trillion yen.
SoftBank Vision Fund: Forward thinking or waste of money
According to Chris Lane, equity analyst at Sanford Bernstein, the market still does not understand Softbank’s ambitions, and as the company grows, its shares could rise by as much as 37%.
In a new report on the company, Lane compares the Softbank Vision Fund to Berkshire Hathaway as it uses cash flow from its core telecoms operations to invest in companies positioning to be part of the future, such as e-commerce, microprocessor designs, and robotics. He believes the market is failing to grasp the future potential of these assets.
Lane notes that the market is still valuing Softbank as a telecom company, but it’s becoming something much more valuable. Using a sum of the parts valuation, Lan believes that the stock is worth an estimated 16, 515 yen, up from today’s value of around 10,000.
Over the past ten years, Softbank has proven itself to be a better buy than Warren Buffett’s investment vehicle. “Over the last ten years, an investment in Berkshire Hathaway has produced total shareholder returns of 129%; investment in SoftBank at the same time would have generated returns just over 305%,” Lane writes. “Whereas investors trust Buffett’s instincts and understand his value investing approach, they fear Masa’s big bets on the future.”
