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How Japan's Warren Buffett chooses where to invest

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He may not be as famous as Warren Buffett, but he is known as the richest man in Japan.

Ranked number 43 on the World's Billionaires 2019, Masayoshi Son is estimated to have a net worth of $US22.9 billion.

Son is the founder and current CEO of SoftBank - a Japanese conglomerate known for its investment in a number of high-profile companies around the world including Alibaba (Amazon of China), Yahoo Japan, Uber and Slack Technologies.

What is SoftBank?

Masayoshi Son, Japan's Warren Buffett

SoftBank is the fourth largest publicly traded company in Japan, coming behind only Toyota, MUFG and NTT. It became a listed company in 1994 when it was valued at $3 billion.

Founded in September 1981 by then 24-year old Masayoshi Son, SoftBank started as a computer parts store. It would go on to become Japan's largest publisher of computer and technology magazines and host of trade shows.

In the same way that Warren Buffett has Berkshire Hathaway as his main investment company, Masayoshi Son has SoftBank as the primary conglomerate behind all his investments.

Investment Strategy

But unlike Warren Buffett, who is also well known for choosing to buy into companies with products or services that are easy to understand, Masayoshi Son seems to prefer companies at the leading edge of technology and innovation.

This is obvious given the list of companies in which SoftBank has invested in over the past several years.

One common theme between Warren Buffett's and Masayoshi Son's investment strategy is that they both tend to buy a majority stake in companies. They don't just buy a few shares here and there.

Here are some of the companies that Masayoshi Son has invested in over the past few years.

Alibaba

Considered the Amazon of China, this company founded by Jack Ma had a market capitalisation of US$352.28 billion as of December 2018. It ranked as the world's biggest Initial Public Offering (IPO) when it listed in September 2014, with a company valuation of US$231 billion.

Masayoshi Son is one of the early investors of Alibaba. He invested approximately US$20 million into Alibaba in 1999 and today owns 29.5 per cent of the Chinese e-commerce giant. Masayoshi Son's initial investment in Alibaba had been estimated to be worth around $108.7 billion as of 23rd October 2018.

Ping An Health

The largest private insurer in China, which attracted a substantial investment from SoftBank to fund its pre-IPO financing.

Given the massive reach and presence of Ping An in China, servicing the medical and healthcare sectors, it is understandable that Masayoshi Son was keen to invest in this company.

Here are some mind-boggling numbers from Ping An:

  • 20,000+ technology and R&D staff members
  • 500+ data scientists
  • 3,000+ international and national patents
  • 190 million registered users of its Ping An Good Doctor app
  • 800 million customers for its Healthcare Technology (covers 70% of Chinese cities)

Slack Technologies

This workplace messaging app company received a boost in funding from Masayoshi Son's SoftBank in September 2017. The initial investment was worth US$250 million from SoftBank's Vision Fund.

Recent industry news showed that Slack is getting ready to go public.

Given the growth and interest in technology companies that promote productivity and collaboration among massive group of users, Slack is well-placed to take advantage of this trend due to the popularity of its workplace messaging app.

Given Masayoshi Son's early investment in the company, it looks like Slack may be another top performer in the SoftBank portfolio.

Uber Technologies

Known for its peer-to-peer ridesharing service, food delivery and bicycle-sharing system.

SoftBank is the largest shareholder in this controversial ride-hailing service which recently completed its IPO. Using the massive pool of US$100 billion raised under its Vision Fund two years ago, SoftBank became one of the early investors in Uber.

Recent industry estimates showed that SoftBank owns approximately 15% of Uber. Though Uber's share price has fallen since it listed, it remains to be seen whether its biggest shareholder will make massive profits or losses in this particular investment.

Some Uber statistics:

  • Estimated 110 million users worldwide
  • 69% market share in the US for passenger transport
  • 25% market share for food delivery
  • 785 metropolitan areas covered worldwide

These are only some of the major companies and brands that SoftBank (and to a certain extent Masayoshi Son in his personal capacity) has invested in and continues to invest in.

Some of these companies may fit into your portfolio while others may not.

Either way, it may be worth considering whether some of these stocks can deliver improved returns to your portfolio just as they have delivered ongoing returns for Japan's richest man.

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