Japan’s zany tech billionaire wants to be Warren Buffett
Japanese billionaire Masayoshi Son has said he wants to be the Warren Buffett of tech. Now, he’s going after the legendary investor on his home turf.
SoftBank(SFTBF), the deal-happy tech company founded by “Masa” Son, is negotiating for a minority stake in European reinsurance provider Swiss Re. The talks are still in a “very early stage” and could still fall apart, Swiss Re said.
The prospect of SoftBank getting into the insurance business has added fuel to comparisons between Son and Berkshire Hathaway (BRKA) boss Buffett: Both investors make bold deals, and both look long term.
Insurance interests would be yet another similarity.
“SoftBank has often been compared to Berkshire Hathaway in terms of the exceptional acumen of each founder: if this deal went through, they would have more in common,” said analysts at CLSA.
Berkshire’s core business is insurance, and Buffett uses the cash it generates to invest in blue chip companies including Wells Fargo (WFC), Kraft Heinz (KHC), Apple (AAPL) and Coca-Cola (KO).
SoftBank is a telecoms company that owns Sprint (S). Son’s $ 100 billion Vision Fund, which is backed by Saudi Arabia and Apple (AAPL), has invested in companies including Slack, WeWork and Nvidia (NVDA).
The tycoon has said his goal is to raise another 100 trillion yen ($ 900 billion) to fund future investments.
SoftBank did not respond to a request for comment on Thursday.
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Analysts said the interest in insurance made sense for SoftBank, which could benefit from a having a more diverse portfolio of investments.
Swiss Re has historically paid an annual dividend around 5%. The Zurich-based firm suffered big losses in 2017 from hurricanes Harvey, Irma and Maria, but generated profits of more than $ 3.5 billion in each of the previous four years.
“To some extent, [a Swiss Re investment] could be seen as a major hedge against the diverse business risk of [SoftBank’s] operations,” said analysts at CLSA.
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While Buffett and Son both love a deal, the comparison is not perfect.
“Whereas investors trust Buffett’s instincts and understand his value investing approach, they fear Masa’s big bets on the future,” Chris Lane, an analyst at Sanford C. Bernstein & Co., wrote in October.
Son, who says he has a 300-year plan for SoftBank, could be looking to shake up the insurance business.
“It is … possible that SoftBank sees some room to disrupt the current structure of the insurance business through better application of technology,” said the CLSA analysts.