Warren Buffett’s Berkshire Hathaway has increased its stakes in five Japanese trading houses to nearly 10% each. The company raised its holdings by more than 1 percentage point each, ranging from 8.5% to 9.8%, according to a regulatory filing. In his 2024 annual letter, the 94-year-old investor expressed his long-term commitment to these investments.
Berkshire Hathaway has reached an agreement with the companies to exceed an initial 10% ownership ceiling. These five trading houses, known as “sogo shosha” in Japan, invest in various sectors both domestically and internationally, similar to Berkshire itself. Buffett initially bought into these companies in the summer of 2019 as part of a strategy that includes hedging currency risk.
By selling Japanese debt, Buffett has been able to pocket the difference between the dividends from these investments and the bond coupon payments required to service the debt. At the end of 2024, Berkshire’s Japanese holdings had a market value of $23.5 billion at an aggregate cost of $13.8 billion. Buffett praised the management teams, investor relationships, and capital deployment strategies of these companies.
He unveiled his Japanese positions after making regular purchases on the Tokyo Stock Exchange, stating that he was attracted by the trading houses’ dividend growth.
Buffett’s growing interest in Japan
In 2023, Buffett visited Japan with his designated successor, Greg Abel, meeting with the heads of these firms.
During this visit, he expressed a desire for Berkshire to own these companies indefinitely. As Buffett continues to grow his cash reserves, which reached a record $334 billion, he has been selling U.S. stocks. In 2024, Berkshire sold more than $134 billion worth of equities, significantly reducing the size of its two largest holdings.
Shares of Japan’s biggest trading houses advanced after Berkshire Hathaway Inc. increased its stake. Shares of Mitsubishi Corp., Marubeni Corp., Mitsui & Co., Itochu Corp., and Sumitomo Corp.
climbed at least 4% as of 9:09 a.m. in Tokyo after filings to Japan’s finance ministry showed that Berkshire’s average holding across the stocks increased by just over one percentage point to about 9.3%. Investors had been speculating over Warren Buffett’s next move since his annual letter to shareholders mentioned that Berkshire is looking to increase ownership in Japan’s five largest trading houses “over time.”
Hideyuki Ishiguro, chief strategist at Nomura Asset Management Co., said, “It’s a signal from Buffett that he still has faith in shares of trading houses, which have been correcting since last year. It’s also a message from him that Japanese stocks are still relatively cheap.”
Buffett’s deepening interest in Japanese trading houses indicates a strategic shift, reflecting his confidence in their long-term potential.
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