Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

Virtuous circle themes of Vision Fund IPOs, ongoing buybacks/MBOs and Alibaba expansion have been replaced by vicious circle narratives of China regulation, the reality of weak liquidity events and another pause in returns to shareholders. The net result is Softbank trades at a similar price and discount to what it did in September last year even as NASDAQ has climbed 25%. The sell off in Softbank shares since Q4 results in May was initially driven by disappointment on a buyback but the discount has stabilized and recent weakness reflects erosion in the underlying value/share.

Virtuous circle themes of Vision Fund IPOs, ongoing buybacks/MBOs and Alibaba expansion have been replaced by vicious circle narratives of China regulation, the reality of weak liquidity events and another pause in returns to shareholders. The net result is Softbank trades at a similar price and discount to what it did in September last year even as NASDAQ has climbed 25%. The sell off in Softbank shares since Q4 results in May was initially driven by disappointment on a buyback but the discount has stabilized and recent weakness reflects erosion in the underlying value/share.     

Softbank Group - The Great Unwinding Has Shifted from the Discount to Underlying Value

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Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

Headline Developments Every week there’s a new deal (or regulation) in gaming.  The Steam Deck, the Epic vs Apple case, China’s regulatory crackdowns (triggering a Tencent and Netease collapse).  Acquisitions ramp up every week (this week alone saw Roblox buy Discord competitor Guilded and Swedish game Holdco Embracer Group snap up three new developers).

Headline Developments Every week there’s a new deal (or regulation) in gaming.  The Steam Deck, the Epic vs Apple case, China’s regulatory crackdowns (triggering a Tencent and Netease collapse).  Acquisitions ramp up every week (this week alone saw Roblox buy Discord competitor Guilded and Swedish game Holdco Embracer Group snap up three new developers).

Headline Developments On the back of the Epic v Apple case, documents were released highlighting that Google (GOOG) had considered buying Epic outright.  During the case, Epic Games outlined Google’s plans to develop “a series of internal projects to address the ‘contagion’ it perceived from efforts by Epic and others to offer consumers and developers competitive alternatives and has even contemplated buying some or all of Epic to squelch this threat”.

Headline Developments On the back of the Epic v Apple case, documents were released highlighting that Google (GOOG) had considered buying Epic outright.  During the case, Epic Games outlined Google’s plans to develop “a series of internal projects to address the ‘contagion’ it perceived from efforts by Epic and others to offer consumers and developers competitive alternatives and has even contemplated buying some or all of Epic to squelch this threat”.

Nvidia shares are up 61% since it announced the acquisition of ARM.  That is great news for <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> , which has seen the pro rata value of its potential NVDA shares soar $11bn (87% economic stake) with almost half that gain coming in the last three months. That stands in stark contrast to the SBG share price (-37% since 10 May) or the value of key assets like Alibaba (-12%) or Vision Fund (-2%). In fact, the absolute return for SBG shareholders is now better than what Coupang produced whilst the unrealized gains alone are worth more than Vision Fund’s China ADR portfolio. The downside is Softbank could lose that if regulatory approvals stumble and as China is the likely flashpoint for that, recent worries on China exposure could get even worse.

Nvidia shares are up 61% since it announced the acquisition of ARM.  That is great news for Softbank Group (9984 JP) , which has seen the pro rata value of its potential NVDA shares soar $11bn (87% economic stake) with almost half that gain coming in the last three months. That stands in stark contrast to the SBG share price (-37% since 10 May) or the value of key assets like Alibaba (-12%) or Vision Fund (-2%). In fact, the absolute return for SBG shareholders is now better than what Coupang produced whilst the unrealized gains alone are worth more than Vision Fund’s China ADR portfolio. The downside is Softbank could lose that if regulatory approvals stumble and as China is the likely flashpoint for that, recent worries on China exposure could get even worse.

Softbank Group - ARM Optionality and Exposure Are on the Rise

<h2>Headline Developments</h2>Another bad week for Didi (DIDI) , with the stock plummeting a further 21% after Bloomberg reported that Chinese regulators were weighing up “serious, perhaps unprecedented penalties” which may include a hefty fine (&gt;$2.8b), enforcing a state-owned investment or delisting the company from the NYSE.

Headline DevelopmentsAnother bad week for Didi (DIDI) , with the stock plummeting a further 21% after Bloomberg reported that Chinese regulators were weighing up “serious, perhaps unprecedented penalties” which may include a hefty fine (&gt;$2.8b), enforcing a state-owned investment or delisting the company from the NYSE.

United States

NVIDIA Corporation designs, develops, and markets three dimensional (3D) graphics processors and related software.  The Company's products provide interactive 3D graphics to the mainstream personal computer market.

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NVIDIA Corp (NVDA US)

Softbank Group - The Great Unwinding Has Shifted from the Discount to Underlying Value

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