Legendary investor, Warren Buffett‘s Berkshire Hathaway (NYSE:BRK) (NYSE:BRK) has amplified its investment in Japan’s five leading trading companies
What Happened: After successfully negotiating the removal of a 10% investment cap, Berkshire Hathaway has raised its stakes in these diverse trading companies.
National Indemnity, a wholly owned unit of Berkshire Hathaway, stated that it increased its stakes in the five Japanese trading houses as per filings with Japan’s securities regulator on Monday. The firm increased its shares in Mitsubishi Corporation from 8.31% to 9.67%, and in Mitsui from 8.09% to 9.82%,
Berkshire Hathaway also augmented its stake in Itochu, Marubeni, and Sumitomo Corporation by approximately one percentage point. None of Berkshire’s holdings have exceeded the 10% cap that was agreed to be “moderately relaxed” with the trading houses last month.
These trading firms play a vital role in Japan as they import essential raw materials such as oil, gas, iron ore, and copper, and bolster the country’s machinery export, automobile, and electronics sector.
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Why It Matters: This move by Berkshire Hathaway signifies a growing confidence in Japan’s trading houses. In February, Buffett’s investment in these firms had already caused their shares to surge by up to 9%.
Buffett, often referred to as the “Oracle of Omaha,” initially disclosed his investments in these trading houses in 2020 and highlighted his increasing appreciation for them in his annual shareholder letter last month. By the end of 2024, the market value of Berkshire’s Japan holdings had risen to $23.5 billion, according to the legendary investor.
While Berkshire has been increasing its investments in Japanese companies, it has also accumulated a record cash reserve, reaching $334.2 billion by the end of last year after selling off equities more broadly.
Nevertheless, Jefferies analyst, Thanh Ha Pham, told the Financial Times that the beneficial effects of Buffett's investments could be offset by challenges faced by the companies, such as declining commodity prices, high interest rates, and the impact of inflation on consumer spending in Japan.
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