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Warren Buffett’s Berkshire Hathaway has lifted its shareholdings in Japan’s five biggest trading houses after negotiating to remove a 10 per cent ceiling for its investment in businesses known for trading everything from noodles to natural resources.
The US investment conglomerate raised its stake in Mitsubishi Corporation from 8.31 per cent to 9.67 per cent, and in Mitsui from 8.09 per cent to 9.82 per cent, according to filings with Japan’s securities regulator published on Monday. It also lifted its stake in Itochu, Marubeni and Sumitomo Corporation by about a percentage point.
None of the Berkshire holdings have hit the 10 per cent cap that the company agreed with the trading houses last month to “moderately relax”.
The trading houses are vital to Japan as importers of raw materials such as oil, gas, iron ore and copper and for supporting the country’s car, electronics and machinery export sectors.
Buffett first disclosed Berkshire’s investments in the trading houses in 2020 and said in his annual shareholder letter last month that his “admiration for these companies has consistently grown”.
The investor known as the “Oracle of Omaha” outlined plans to hold the stakes for “many decades” and praised the companies for their similarity to Berkshire, which started as a textiles manufacturer before becoming a sprawling investment conglomerate.
Likewise, Japan’s trading houses have taken long-term stakes in businesses spanning salmon farms, convenience stores and medical insurers.
While Berkshire has been doubling down on the Japanese companies, it has also built up a record cash pile that hit $334.2bn at the end of last year after selling equities more broadly.
Thanh Ha Pham, analyst at Jefferies, said he would be looking at the trading houses’ shareholder return policies when they announce results for the full year ending in March.
But he cautioned that the positive impact of Buffett’s investments would be counteracted by hurdles for the companies, including softening prices for commodities in which they are invested, high interest rates and the impact of inflation on consumer spending in Japan.
