By Jacky Wong

Should you pay $50 to buy a box containing $100? There's a catch: the value of money in the box fluctuates and you can't take it out.

Investors have been answering yes to a similar question on SoftBank's stock, which trades at a big discount to its net assets, this year. But they may have second thoughts after the company's latest plan to set up an in-house investment arm.

According to the company's calculations, SoftBank's shares are trading at around a 50% discount to its net assets, including stakes in Chinese e-commerce giant Alibaba, wireless carrier T-Mobile and British chip designer Arm Holdings. That discount has already narrowed this year as SoftBank's stock has risen 34% to levels last seen during the dot-com bubble.

SoftBank's decision to sell or monetize Yen4.5 trillion ($42 billion) worth of assets to buy back shares and redeem debt has been the main driver. On Tuesday, the company said the asset monetization is mostly done, which includes selling two-thirds of its T-Mobile holdings. It unveiled Yen2.5 trillion worth of buybacks this year, of which Yen1 trillion has already been completed. It has also repurchased bonds and paid down debt.

The rally in technology stocks has also led to a turnaround in SoftBank's $100 billion Vision Fund. The fund reported an investment gain of Yen297 billion for the quarter ended in June, after posting an investment loss last fiscal year, in part due to the WeWork debacle.

Buybacks and rising asset values are good news, but SoftBank's decision to set up something akin to an in-house hedge fund will raise investor eyebrows again. The company said it would set up an investment management subsidiary to manage $555 million worth of excess cash. Investments would include publicly traded stocks like as Amazon.com and Facebook, as well as derivatives like call options on Alibaba. What makes matters worse is that Masayoshi Son, SoftBank's chairman, will own a third of the subsidiary, leading to a potential conflict of interest. That may not be a big amount at the moment, but it is a red flag for the company's corporate governance.

As with the example of the $100 box, investors will be more willing to pay up if they know where the money will go and how the returns will be distributed. SoftBank's latest investment project will work against that.

Write to Jacky Wong at JACKY.WONG@wsj.com