Yosemite Sam is Running Risk Management at SoftBank

Issue 35

09.07.20 - Softbank took a massive bet on Nasdaq tech stocks purchasing billions of dollars of equity options betting on a continued market rally. The looming question now is what exactly happened? The Financial Times had reported last week that the Japanese Conglomerate's new trading arm cleared $4 billion in trade gains. As the market turned last week, it is unknown how large SoftBank’s exposure is to these wild derivative bets the number could in the tens of billions. A figure that was reported was a notational exposure of $30 billion. It is even being said that SoftBank through its scale and heavy bets on call options may have even moved the market to partially drive the rally. The smoke has yet to clear, as institutions like SoftBank use structures to help mask their market positions from showing up through public disclosures. SoftBank’s founder Masayoshi Son has been known to take big bets and occasionally lose. During Dotcom, he once lost $70 billion. Recently, SoftBank’s $100 billion Vision Fund made a multibillion-dollar bad bet on WeWork, these options bets will either dig the conglomerate out of its Vision Fund losses or put the company further into a corner. It’s fair to note that SoftBank has also had big wins, such as Alibaba, and it’s investment in ARM. Time will tell how this bet unfolds.

Source: Brookfield Brief