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Elliott Management Raises SoftBank Stake, Pushes For Buybacks, Says Market 'Undervalues' Portfolio

Hedge fund and activist investor Elliott Management Corp. expanded its long-held stake in

Benzinga · 02/07/2020 17:31

Hedge fund and activist investor Elliott Management Corp. expanded its long-held stake in

SoftBank Group Corp - ADR (OTC: SFTBY) last year to about 3%, according to The Wall Street Journal.

The $2.5 billion bet makes SoftBank one of Elliott’s largest investments.

“Elliott’s substantial investment in SoftBank Group reflects its strong conviction that the market significantly undervalues SoftBank’s portfolio of assets,” an Elliott spokeswoman said.

Elliott's Demands For SoftBank

Elliott is pressuring SoftBank to repurchase between $10 billion and $20 billion of its stock, improve transparency, change the decision-making structure at the Vision Fund and empower the board with more independence and diversity.

To finance the buyback plan, it proposes to sell a small amount of publicly listed holdings to raise capital and to buy its own shares at a steep discount.

“Elliott has engaged privately with SoftBank’s leadership and is working constructively on solutions to help SoftBank materially and sustainably reduce its discount to intrinsic value,” the Elliott spokeswoman said.

SoftBank shares surged on news of the hedge fund’s stake.

SoftBank's Startup Bets 

SoftBank has been under heavy scrutiny since it realized losses on major startup bets, including WeWork, Uber Technologies Inc (NYSE: UBER) and Slack Technologies Inc (NYSE: WORK).

Its stakes in Alibaba Group Holding Ltd - ADR (NYSE: BABA), Sprint Corp (NYSE: S) and the SoftBank telecom business have failed to buffer the impact.

In November, SoftBank recorded its largest quarterly loss ever. Investors have been concerned that, with an $89-billion market cap, SoftBank trades at a hard discount to its $210-billion holdings value.

What’s Next For SoftBank 

SoftBank is said to be cooperating with Elliott and is open to shareholder suggestions.

“SoftBank always maintains constructive discussions with shareholders regarding their views on the Company and we are in complete agreement that our shares are deeply undervalued by public investors,” a SoftBank spokeswoman said. “SoftBank welcomes feedback from fellow shareholders.”

Over-the-counter SoftBank shares were trading 0.41% higher at $23.30 at the time of publication Friday.

Related Links:

WeWork To Provide Office Space To Fellow Softbank-Backed Startup In New York

Two Investors Want To Buy Controlling Stake In WeWork China: Reuters

Photo by Kirakirameister via Wikimedia