Warren Buffett has increased his stakes in five major Japanese trading houses to nearly 10% each. This move shows his growing confidence in Japan’s economy. Buffett’s company, Berkshire Hathaway, has reduced its positions in U.S. stocks at the same time.
Buffett raised Berkshire’s holdings in the five Japanese companies by more than 1 percentage point each. The stakes now range from 8.5% to 9.8%. The companies are the largest “sogo shosha” in Japan.
They have diverse investments both in Japan and in other countries. In his 2024 annual letter, Buffett said Berkshire is committed to its Japanese investments for the long term. He said Berkshire had reached an agreement with the companies to own more than 10% of each one.
Berkshire first invested in these companies in the summer of 2019. One of Buffett’s strategies is to hedge currency risk. He does this by selling Japanese debt.
He then profits from the difference between dividends from the investments and the bond payments needed to service the debt.
Buffett increases Japanese firm stakes
By the end of 2024, Berkshire’s Japanese holdings were worth $23.5 billion.
Berkshire had paid a total of $13.8 billion for them. Buffett praised the Japanese companies for their management, investor relations, and use of capital. When he first disclosed his positions in these companies, he said their attractive dividend growth was a major factor in his decision to invest.
In 2023, Buffett traveled to Japan with Greg Abel, who is set to take over Berkshire. They met with the leaders of the Japanese firms. Buffett said he wants to keep these investments indefinitely.
While investing more in Japan, Buffett has been actively selling U.S. stocks. This has raised Berkshire’s cash reserves to a record $334 billion. In 2024 alone, Berkshire sold over $134 billion worth of U.S. stocks.
Most of this came from reducing its largest holdings. Buffett, known as the “Oracle of Omaha,” continues to change his strategy based on market conditions. His recent moves highlight his shift in focus from U.S. assets to promising opportunities in other countries.
This helps ensure Berkshire Hathaway’s continued growth and diverse investments.
Image Credits: Photo by Roméo A. on Unsplash
