Maybe Masayoshi Son secretly hates Mohammad bin Salman and the whole Softbank Vision Fund was just a clever way to basically light Saudi oil money on fire while maintaining plausible deniability.
Looking at Softbank's investments, I am having trouble coming up with a better explanation for their behavior.
Many Saudi money investments over the years have gone to ridiculous non-returning projects. As much publicity as they've been getting, I suspect the Soft bank guided investment have actually moved the bar upward on the quality of Saudi project investments.
The Saudis have this huge problem of trying to turn all the oil wealth into something, anything more permanent to diversify their economy before the oil runs dry or climate regulations cutoff the money flow. Earlier work more independently seems to not to have come to much so. Soft Bank and maybe even to some degree the ARAMCO IPO are possible ways to try to tie into global capability to try to up their conversion success.
I'm wondering why Saudi Arabia doesn't just buy the S&P 500 like any index fund. It doesn't seem that hard to diversify? Is it not possible at their scale?
Norway has a trillion dollar sovereign investment fund and they seem to be profitable and uncontroversial?
Even dropping $0.1 trillion into the $25 trillion SP500 fund would affect the price and cause inflation. Index funds do not have the capacity to absorb that much wealth, so large funds like the one in Norway seek out other investments just like Vision Fund.
> Norway has a trillion dollar sovereign investment fund and they seem to be profitable and uncontroversial?
You're comparing apples to oranges. One is a sovereign wealth fund managed by citizens, for citizens. The other is a wealth fund managed by royalty, for royalty, with the main goal being to keep said royalty in power.
Are you implying that royalty likes to lose money? Morever, thr Sauds run a massive welfare state, so it’s a little unfair to claim that Norway’s and Saudi Arabia’s funds are so different.
Firstly, the royal family could care less about the welfare of the average Saudi citizen. Secondly, the royal family has full control over the fund (with zero accountability).
Given these two facts, there is much less harm if they play hard and fast with the fund. Besides, most of the royal family already has their welfare guaranteed for life in the form of personal investments and the monthly salary.
I'm no expert, but from what I imply from general coverage I've seen is that a lot of the cashflow is spoken for in operating Saudi gov't, public basic-income like payments, and family / ruling class payments. Again my guess, but making the case you need to cleanup the company finances for external investors and public accounting purposes may have been easier than trying to separate it out outright internally - either for the purpose of better long term diversification or, maybe, for the more cynical interpretation of gaining more family control of the asset of Aramco.
Norway was pretty unique in that early on they decided to route most of the cashflow into their fund. They're an (the only?) exception to what has been called the resource curse. Oil riches usually don't work out as well as in Norway.
I don't get this part either. Imagine if they'd just thrown that money into AAA international real estate(ie buy skyscrapers outright in 20 major cities) or just run it like a private equity hedge and just bought major stakes in 20 world companies.
It seems hard to imagine that those strategies wouldnt have done alot to diversify and future proof their wealth without gambling on something like wework.
Maybe these transactions would be blocked under some type of foreign influence laws but maybe they could have also snuck under the radar by laundering credibility and origins through the vision fund.
And why should Saudi Arabia to that? It’s a terrible idea. 100% exposure to US equities is a bad bad idea. Ideally as an investor, you wsnt to build a portfolio of uncorrelated assets.
It would still be a lot more diversified than the Softbank fund is. Okay, so maybe multiple index funds in different countries? And a bunch of bonds funds?
I guess it's more correct to say the (partial) sale of Aramco is a major part of their diversification efforts, and the IPO is the first step in that. They wanted to sell more, and surely will if the price is right.
Reality may not be too far a departure from fiction. Great writeup by Professor Galloway on how this could have been a CIA job in the form of a Homeland treatment I found really fun to read:
Well written, I enjoyed it. It is a fictional story, just because something like that seems like it could happen in the world doesn't mean its reality. I think it plays into the desire we have to have order in the world, some unknowing or unseen force driving things and the world is not as chaotic as it really seems. Its the same thing that drives people to theorize about what is really going on behind the scenes about other events, e.g. suicides, plane crashes, etc.
The economic system is driven by greed, there are countless other companies that have essentially been vaporware with no serious amount of foreign investing like WeWork had. Stock symbol GTAT was one that went bankrupt on contract to make sapphire screens for Apple. They weren't a scam but way over promised on what they could do, fooled Apple's due diligence to spend half a billion dollars on a plant in Arizona to make these sapphire screens. Both American companies, GTAT headquartered in New Hampshire and mostly large US institutional investors as their main shareholders.
WATT is another one that I know of and have been following, claims the ability to wireless charge phones not on a mat but in a given area or in a room. However they is no feasible way they can simply overcome physics on that: radio waves follow an inverse square law for power density and they won't get the type of power delivered for that and other reasons. Using a mat if you want wireless charging is about as good as its going to get for the trade offs that come with that. Anything else just doesn't seem economical or able to provide enough of an advantage for people to buy it.. getting that advantage is going to be really hard especially with the technology the company is developing, cause inverse square law. Also wattage for charging a phone is increasing, and we're now seeing power adapters using GaN and delivering 40+Watts in a small form factor... the gap will continue to widen and they won't be able to overcome physics. Yet the stock was as high as 15 or so dollars a share in the last year. Now down to around 2... in this market that is no easy thing to do. Heck even Apple couldn't get it right to make a mat that could charge 3 different devices at once and had to cancel it because, once again, physics.
Enron is the classic example for vaporware and downright fraud. If any entity was hit the strongest by that it would be the state of California having lost billions in economic activity due to the rolling blackouts that company imposed on the state for years to make money.
Okay, that's actually pretty interesting. Practically though, no one is going to do that and it probably runs a foul of FCC regulations. I am pretty sure for that company they're not claiming they have the technology which makes use of this in anyway either.
If they use an ISM band the FCC wouldn't care. You wouldn't get cell signals while inside the room, but passive blocking is legal.
Researchers at Disney are probably looking at it because they want some walk-in interactive experience (like their VR stuff) where batteries would either be an ongoing maintenance hassle, or because they have dozens/hundreds of individual objects that would be impractical to recharge by hand. Hmm, like a big room filled with hundreds of mouse sized wheeled robots, or a thousand quadcopters...
If SoftBank wants to do something more productive with all that cash, I propose they invest a huge amount in some Japanese aircraft manufacturer so they can start building planes competitive with the 737MAX. The aircraft market is screaming for something like this, with the existing duopoly between Boeing and Airbus, and seemingly a new article every week about how bad Boeing is (today, it's some new whisleblower former 737 production manager alleging production problems with the plane). China is working on building such aircraft, but surely Japanese-made aircraft would be trusted much more. This would certainly be a much better use of VC money than subsidizing dog-walking.
I don't think throwing more money at the problem will speed it up too much, they need to build up the institutional knowledge with smaller projects like this before jumping on a jumbo jet.
Yeah, I've read about that, and it's good news, but more investment does allow faster expansion because building bigger planes requires capital investment in facilities. But you're right, you can only expand so fast because you have to build up institutional knowledge, however I will point out that I wasn't proposing that they jump right to jumbo jets, only that they need to more quickly build jets competitive with the 737MAX (which is a mid-size jet). Eventually it'd be great if they also built jumbo jets, but what the market needs the most right now is a modern 737 replacement made by someone other than Boeing. Boeing isn't trustworthy any more, and they're still bound and determined to stick with a 50-year-old airframe design no matter what.
I'll also suggest that, with lots of investment funding, not only could they buy more equipment and land and build facilities, they could also poach valuable employees from other aircraft makers to build up that institutional knowledge more quickly. Surely there's some disgruntled Boeing engineers who value quality and safety over executive bonuses who might like to work for a while in Nagoya?
There is of course a middle point here... "oh, I don't like this guy and he's incompetent enough so that I can be a little evil to him without risking any consecuence".
I'm guessing the risk was asymetric for SoftBank vs KSA. SoftBank probably made a ton of money guaranteed by the deals, plus the chance to make a ton more if they worked out.
KSA only makes money if it works out, and it's not.
Because it applies the convention of one forum to another. It assumes that the readers of this forum will be familiar with them and appreciate their inclusion.
Looking at Softbank's investments, I am having trouble coming up with a better explanation for their behavior.