Finimize - 🧘‍♀️ Buffett bides his time

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Today's big stories

SoftBank reported a quarterly loss, as its Vision Fund took a massive hit
There’s a handful of underdog companies having a moment, and this might be the time to back them – Read Now
Warren Buffett’s investment firm Berkshire Hathaway reported mixed quarterly results

Poor Vision

What’s Going On Here?

SoftBank reported a quarterly loss on Monday, with the Japanese giant struggling to make out winners for its “Vision Fund” like it used to.

What Does This Mean?

SoftBank’s Vision Fund – the world’s biggest tech-focused investment fund – has swung between big profits and heavy losses ever since it was launched. Last quarter was decidedly the latter, with nearly $18 billion being wiped off the value of its listed investments. Its stake in South Korean ecommerce company Coupang took a $6.7 billion hit, for one, while its investment in ride-hailing car firm Didi posted a $6 billion loss of its own. And while the fund did turn a profit from selling off stock in DoorDash, that couldn’t stop it from posting a bigger loss than it reported even during the height of the pandemic.

Why Should I Care?

For markets: SoftBank’s trying to keep investors on side.
SoftBank’s stock price has fallen more than 40% since March, which – according to the CEO – means the company is now worth less than half as much as its own portfolio of investments. That can’t be great for its ego, but at least it’s trying to keep investors happy: the company announced on Monday that it would be buying back 15% of its own shares available on the market, which will reduce their supply and, in turn, push up the price of those left over.

For you personally: Easy come, easy go.
Share buybacks don’t always result in higher share prices, mind you: some companies – particularly tech firms – issue new shares to employees on a regular basis to keep them motivated. As an investor, then, you’ll want to do your research into how many shares the company in question is doling out to employees – otherwise you risk seeing the upside of buybacks wiped out the moment a flood of new shares arrive.

You might also like: Is this SoftBank-backed robotics company the next big ecommerce play?

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Analyst Take

These Underdog Companies Are Mounting An Inspired Comeback

Carl Hazeley, Analyst

What’s Going On Here?

Rocky. The Mighty Ducks. Average Joe’s Gym.

These are the underdogs we grew up cheering on as they took down their much more chiseled rivals, and now we can add one more to their ranks.

This group of stocks has only beaten the US stock market 30% of the time since 1990. But since 2016, they’ve doubled that success rate.

And that trend hasn’t shown any signs of slowing down in 2021, thanks to record-low interest rates and a variety of other factors.

In other words, this could be a good time for you to pull out your foam finger and get behind them.

So that’s today’s Insight: why these down-on-their-luck companies are suddenly outperforming their rivals, and where you can find them.

Read or listen to the Insight here

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