Elliott’s SoftBank exit could be premature

Paul Singer speaks during the Skybridge Alternatives Conference in Las Vegas, Nevada, May, 9, 2012. REUTERS/Steve Marcus

LONDON, Aug 16 (Reuters Breakingviews) - Masayoshi Son no longer has an activist at the gates of his $74 billion technology empire. Elliott Management, Paul Singer’s uppity hedge fund, earlier this year sold down most of its remaining stake in Son’s SoftBank Group (9984.T), according to the Financial Times. It marks the end of a more than two-year bet, originally worth $2.5 billion, which was premised on the Vision Fund and Arm owner narrowing the discount to the sum of its parts by selling off assets and buying back shares.

As Breakingviews predicted before Elliott’s stake became public, there was serious money to be made from closing that gap. Son started liquidating some assets after the initial Covid panic and used the proceeds for buybacks, which allowed Elliott to reduce its holding last year for a $500 million profit, the New York Post reported. More recently, however, Son has suffered departures of senior executives, and has been hit by the tech rout, which erased $40 billion in previously announced gains read more . Elliott’s decision to sell reflected a loss of confidence in Son’s ability to lead a turnaround, the FT said.

The question is whether the activist has given up too easily. SoftBank last week decided to massively reduce its holding in e-commerce giant Alibaba (9988.HK), , which amounted to slaying a sacred cow at SoftBank read more . If that means Son is serious about a bigger breakup of the group, Elliott’s exit may come to seem premature. (By Karen Kwok)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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Editing by Liam Proud and Pranav Kiran

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