Long-Term Alibaba Group Holding Ltd (BABA) Investors Should Read This

Softbank shares currently trade at ¥10,000. So, if you like Softbank’s core business, you can own it for this price and receive Alibaba, Sprint, and Yahoo! Japan shares for free. If you are a long-term Alibaba Group Holding Ltd shareholder, you can sell your BABA shares, buy the same amount of Softbank shares, and own the same amount of BABA shares (indirectly through Softbank). This way you will receive Softbank’s core business, Sprint, and Yahoo! Japan investments free.

There usually aren’t free lunches available in equity markets but this is as close as you can get to a free lunch.

The main issue with this investment is that Softbank shares might not go up or down as much as Alibaba shares in the short term. It is also possible that the value of Softbank’s core business and other investments turn negative. However, we don’t think this is probable and if you are really long-term bullish on Alibaba shares, you shouldn’t worry about short-term fluctuations/correlations between Softbank and Alibaba shares. The market clearly undervalues Softbank’s Alibaba shares and if your goal is to get long-term exposure to Alibaba shares, buying Softbank shares is way better than buying Alibaba shares.