As a value investor, it is very difficult to find any investments in the blockchain and cryptocurrency space that make any sense from a valuation standpoint (just look at the performance of various companies that have done a "pivot" to include blockchain in their company name or strategy). In fact, SBI (OTCPK:SBHGF) currently trades at ~15x P/E with a 2%+ expected dividend and P/BV of ~1.25x
However, this investment idea reminds me very much of Silicon Valley Bank during the tech bubble when it was trading like a regular bank but had all these warrants of high flying dot.coms that were not clearly disclosed to investors. Once disclosure improved and they started cashing in these warrants, its valuation improved dramatically, giving investors a relatively low risk but high return situation during the height of the dot.com boom.
As Mark Twain says "history doesn't repeat itself but it often rhymes". I believe a similar situation is playing out with SBI Holdings (although I am writing this article under SBHGF, I am going to use figures in Yen for ease of discussion. $/SBHGF is the same as the Japanese ticker 8473.T after adjusting for the YEN/US$ exchange rate)
SBI Holdings is a financial company currently with a ~570 bln Yen market cap with 3 main segments:
1) "Financial Services Business" - This is mainly its securities, online brokerage and investment banking business (and to a lesser extent a banking and insurance business). The segment actually continues to perform well, largely on the back of being an online brokerage market leader in Japan. The run rate profit before tax for this segment is ~60 bln Yen
2) "Asset Management Business" - This segment operates more like a venture capital arm of SBI with various investments in FinTech, Morningstar Japan and other holdings. The run rate profit before tax
