Elliott Management Rebuilds Significant Stake In Masayoshi Son's Softbank, Pushes For $15B Share Buyback: Report

Elliott Management has reportedly re-established a significant stake in SoftBank SFTBYand is advocating for a $15 billion share buyback.

What Happened: The U.S.-based activist fund's position is valued at over $2 billion, the Financial Times reported on Wednesday. Elliott has been in direct discussions with SoftBank's senior management for the past two to three months, sources familiar with the matter revealed.

The fund’s move comes as the gap between SoftBank's asset value and its market valuation reaches unprecedented levels. SoftBank's shares surged by up to 5.5% in late trading in Tokyo on the news of Elliott's stakebuilding.

Elliott believes a $15 billion share buyback would immediately boost SoftBank’s share price and signal confidence in the strategy of its founder, Masayoshi Son. This marks Elliott's second major investment in SoftBank, following a previous stake of $2.5 billion in early 2020.

SoftBank’s current growth strategy revolves around its significant stake in UK chip designer Arm, whose rising stock price has elevated SoftBank's net asset value to a record $180 billion. Despite this, SoftBank’s market capitalization remains around $90 billion.

Elliott's renewed investment is part of its broader strategy in the Japanese stock market, where it has also targeted companies like Toshiba and Dai Nippon Printing.

Elliot Management and SoftBank have yet to respond to queries sent by Benzinga.

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Why It Matters: Elliott Management’s renewed interest in SoftBank comes after a period of disillusionment. In August 2022, Elliott sold almost all of its SoftBank stake amid a tech selloff, losing faith in Son’s ability to bridge the gap between SoftBank’s asset value and market capitalization. Elliott was particularly frustrated by the lack of share buybacks, as Son continued to invest heavily in early-stage startups.

SoftBank’s recent financial performance has shown signs of recovery. In May, the company reported a quarterly net profit of $1.5 billion, bolstered by the soaring valuation of Arm Holdings and its AI expansion efforts. However, SoftBank also reported a full-year net loss of $1.46 billion, highlighting the volatility of its tech-heavy Vision Funds.

Elliott’s broader strategy in Japan includes acquiring stakes in other prominent companies. In April, Elliott secured a significant stake in Sumitomo Corp., a Japanese trading company backed by Warren Buffett.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari