Click here for the PDF: The Weekly Beacon – May 19 2023
We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.
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This weeks issue: Softbank, Vision Fund, Technology investing, Venture investing, Saudi Fund, Masayoshi Sun, Private equity, Alternative Assets, Defensive investing, Debt crisis, Government default, U.S. debt ceiling, Foreign currency reserves, U.S. dollar dominance, Gold, Auto industry, Automakers, Tesla, Ford, General Motors, EVs, EV production, Tail risk, Hedging portfolios, Historical valuations, Turkey election, Turkish Lira, Turkish CPI, Turkish equities, 60/40 portfolio.
Softbank’s bubble continues to burst
Softbank’s Vision Fund reported a loss of $32 billion for the year ending March 31, 2023. The Japanese investing giant continues to suffer from valuation corrections and private markdowns across its private and public tech company portfolio. Softbank’s poor performance this year contradicts the overall backdrop in the technology sector. Large-cap technology companies have rallied hard in 2023 erasing some of their 2022 losses. The reason Softbank’s losses have ballooned is their investments are mainly in unprofitable, cash-burning tech companies that are speculative or have a long way to go before profit.
Softbank’s roots go back to the 1980s but its place atop the tech sector roots back to a $45 billion investment from the Saudi Arabia investment fund in 2017, invested directly into the Vision Fund run by Masayoshi Son.
The Vision Fund was launched in 2017 with $100 billion in capital. The Vision Fund is the brainchild of Softbank’s founder Masayoshi Son. The fund has invested in various technology companies including Uber, Door Dash, Nvidia, Slack, and many more. It is known as a large investor across private and public markets. Softbank was the investor originally responsible for grossly overvaluing WeWork and has lost billions in the process. Softbank was also an investor in FTX which went through their issues at the end of last year.
Softbank’s Vision Fund had gained $66 billion by the end of the first quarter of 2021. Fast forward two years and the Vision Fund is now down, erasing all its gains.
Click here for the PDF: The Weekly Beacon – May 19 2023
