DUBLIN – As Bitcoin prices have recovered from their late-December 2018 low of $2,900 to today’s $5,000, it’s worth reflecting again on the dangers of market timing. One of the most common mistakes that we make as investors is to follow the herd and buy when everyone else is buying. Indeed, it is the very fact that we do this that pushes prices upward. Rising prices are often little more than herd momentum. And, as the story below illustrates, it doesn’t matter who you are, we are all susceptible to this bad habit. Let the tale of Masayoshi Son – whose legendary investment acumen has turned him into a billionaire – serve as a reminder to us all that pride comes before a fall… in asset prices. – Felicity Duncan
SoftBank Founder Masayoshi Son Lost $130 Million on Bitcoin
By Rachael Levy and Liz Hoffman
(The Wall Street Journal) Masayoshi Son, the billionaire founder of SoftBank Group, made a huge personal bet on bitcoin just as prices for the digital currency peaked, losing more than $130 million when he sold out, according to people familiar with the matter.
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Mr. Son, who launched the world’s biggest venture-capital fund on the strength of his long-term investing acumen, made the investment at the recommendation of a well-known bitcoin booster, whose investment firm SoftBank bought in 2017, the people said.
The investment came at the peak of the bitcoin frenzy in late 2017 after the digital currency had already risen more than 10 fold that year. The exact size of the bet couldn’t be determined, but bitcoin peaked at nearly $20,000 in mid December 2017 and Mr. Son sold in early 2018 after bitcoin had plummeted, the people said.
Bitcoin closed Monday at $5,381.05.
Mr. Son is known for quick investment decisions and big risky bets, most of which have paid off. He decided to back Alibaba Group Holding Ltd. after spending just five minutes with its founder, Jack Ma. He took a half-hour to greenlight a $200 million investment in a startup that grows vegetables indoors.
Mr. Son’s previously unreported loss shows that even some of the world’s most sophisticated and wealthiest investors got caught up in the frenzy. With a net worth estimated by Bloomberg LP at $19 billion, Mr. Son will hardly notice, though it dents his reputation as a patient and prophetic investor.
A SoftBank spokesman declined to comment on Mr. Son’s behalf.
Mr. Son was encouraged to make the investment by Peter Briger, the co-chairman of asset manager Fortress Investment Group, the people said. SoftBank bought Fortress in February 2017, inheriting the asset manager’s bitcoin reserves along with its more traditional investment funds.
Fortress under Mr. Briger first bought bitcoin in 2013, when it was still a fringe technology used mainly in the darker corners of web commerce. By the time the SoftBank deal was completed, its holdings were worth more than $150 million.
Mr. Briger declined to comment through a spokesman.
Mr. Son built SoftBank mostly on long-term technology investments and used his record to launch the $100 billion SoftBank Vision Fund. The fund, backed by the government investment fund of Saudi Arabia, owns big stakes in Uber Technologies Inc. and WeWork Cos., and has been credited with driving up valuations of some of the biggest private technology companies.
The Vision Fund is facing a test of its success with the coming initial public offering of Uber, which is aiming for a valuation of as much as $100 billion, below previous expectations but still above where the fund invested.
Even as it looks ahead to futuristic technology, SoftBank’s most immediate problem is its controlling stake in U.S. mobile phone company Sprint Corp. The 2013 deal has weighed down the conglomerate with debt, limiting its investing options.
Last week The Wall Street Journal reported that Sprint and T-Mobile’s merger had been challenged by U.S. Justice Department staff lawyers, who expressed concerns that the all-stock deal would threaten competition.
Sprint, hoping for approval, said in a regulatory filing last week: “Sprint is in a very difficult situation that is only getting worse. Sprint is not on a sustainable competitive path.”
Write to Rachael Levy at [email protected] and Liz Hoffman at [email protected]
