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CLSA Expects SoftBank To Focus More On Buybacks Than High Growth Stocks Like Alibaba

  • Softbank Group Corp SFTBY SFTBF may, for the first time, spend more on share buybacks than investments through its landmark Vision Fund as the firm goes into “defense” mode, according to CLSA’s Oliver Matthew.
  • “I think that the comments yesterday from Masayoshi Son made it very clear we’re in defense round two,” Matthew said. “They started defense round one when they saw Covid they started selling off some of their less core assets.”
  • The firm’s Vision Fund invests in high growth stocks ranging from Chinese tech giants like Alibaba Group Holding Limited BABA and DiDi Global Inc DIDI to South Korean e-commerce firm Coupang, Inc CPNG.
  • “I actually think it’s possible for maybe the first time we see them spending more on their own share buybacks than they do in new investments in Vision Fund 2,” said Matthew. 
  • In November, SoftBank declared plans to buy back up to one trillion yen ($7.77 billion) of its shares.
  • SoftBank posted a record $27 billion loss in its Vision Fund due to the tech meltdown in recent months.
  • Founder Masayoshi Son opted for “defense” mode due to myriad headwinds that have roiled global markets, from inflation fears to the U.S. Fed rate hike. 
  • Higher interest rates make the growth stocks like techs’ future earnings appear less attractive.
  • Price Action: SFTBY shares traded higher by 15.71% at $19.72 on the last check Friday.

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