Buffett first disclosed positions in all five of these Japanese trading companies, known as sogo shosha, back in 2020. These companies are involved in a diverse range of industries, including liquefied natural gas and salmon farming.
Warren Buffett, the legendary investor, is turning his attention to Japan.
Warren Buffett’s company, Berkshire Hathaway Inc., has increased its investment in Mitsui & Co., becoming one of its major shareholders, as Buffett bets on Japan’s trading houses.
According to a statement released on Monday by Mitsui, Berkshire Hathaway has increased its holdings in the company to over 10% in terms of voting rights and is open to further expanding its shares.
Mitsui’s shares increased as much as 2.2%. The other Japanese trading companies, such as Mitsubishi Corporation, Itochu Corporation, Marubeni Corporation, and Sumitomo Corporation, also saw a similar outcome, with an increase in shares in Tokyo.
Buffett first disclosed positions in all five of these Japanese trading companies, known as sogo shosha, back in 2020. These companies are involved in a diverse range of industries, including liquefied natural gas and salmon farming. Since Buffett is involved in the companies, they have consistently outperformed Japan’s Topix index.
Initially, Berkshire planned to keep its shares in the companies below 10%, but as Buffett explained in his annual letter to investors, the Japanese companies agreed to increase “moderately”. Berkshire has already increased its stake in Mitsubishi Corp. to above the 10% threshold.
Ryunosuke Shibata, an analyst at SBI Securities, noted that as Buffett, often called the “god of investing,” continues to buy, it has provided a boost for Japan trading house stocks.
Since the businesses are diversified across multiple industries, they have been better able to handle global volatility in commodity prices compared to their international competitors. At the same time, they are focusing on increasing shareholders’ returns.
Berkshire’s move to increase the stakes in the companies shows its confidence in them. The company raised its stake in Mitsubishi to 10.23% as of Thursday, up from 9.74% in March. Separately, Mitsui stated that Berkshire Hathaway increased its holdings in the trading house.
The legendary US investor, known as the Oracle of Omaha, first invested in these trading houses in 2020. Since then, the companies have benefited from his interest, and in recent years, they have also been more focused on increasing the returns for their shareholders and adjusting their portfolios to reduce risks in volatile industries.
A Mitsui spokesperson commented that Berkshire’s investment is a sign that the company trusts Mitsui and aims to strengthen its portfolio. As of March, Berkshire’s stake in Mitsui was at 9.82%.
Mitsubishi’s stock closed 1.9% in Tokyo after the announcement. Mitsui, Itochu, and Marubeni shares increased 1.2%, while Sumitomo closed 1.1% higher.
Norikazu Shimizu, an analyst at Iwai Cosmo Securities, stated that Berkshire’s continued interest has brought a spotlight on these companies. He added that the trading houses have become more aggressive about increasing shareholder returns, such as through share buybacks.
Regulatory filings indicate that Berkshire Hathaway has applied to the US Federal Energy Regulatory Commission for approval to increase its holdings in these Japanese companies, and FERC approved the application earlier this month.
A spokesperson for Itochu stated that the company has not confirmed the additional shares it plans to buy, but expects the shareholding ratios to likely level out around 10% over time. Sumitomo’s spokesperson said it’s unclear if Berkshire’s stake has surpassed 10%, while Marubeni declined to comment.
Berkshire Hathaway’s bets continue to pay off. The ripple effects are already being felt in Tokyo’s stock market, where the presence of the “Oracle of Omaha” has risen both share prices and expectations. As Buffett is expanding its footprint in Japan’s trading houses, it may ultimately become a turning point for how global investors view these multifaceted businesses.
