Pavel Alpeyev, Takahiko Hyuga and Giles TurnerTokyo — Just when investors thought Masayoshi Son was reining in risk at SoftBank Group, the Japanese billionaire’s foray into leveraged derivatives is giving them extra reason to worry.
“Son is a speculator, not this visionary everyone claims he is,” said Amir Anvarzadeh, a market strategist at Asymmetric Advisors in Singapore, who has covered SoftBank since it went public in 1994. “This is yet another proof of that, as he is never too far from the action when a bubble is formed.” It is far from certain that SoftBank’s options bets exposed the company to undue risk. Indeed, derivatives are designed to help investors hedge their exposure to sudden stock moves or surges in volatility. SoftBank’s derivatives trading began in June with relatively conservative positions, such as collar trades, according to an insider, who asked not to be named.
Son’s big bets have often baffled investors. In 2006, SoftBank acquired the Japanese wireless operations of Vodafone Group Plc in Asia’s largest leveraged buyout yet Asia at the time. Few gave him any chance of turning around the troubled business, but he exclusive rights to the first iPhone in Japan.
“SoftBank keeps changing its strategy. We are now a long way from ‘taking minority stakes in technology start-ups,’” said Atul Goyal, senior analyst at Jefferies. Still, Goyal said betting against SoftBank shares was risky while the company remained committed to its buyback programme.