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Buffett increases stake in five Japanese trading houses

Warren Buffett’s Berkshire Hathaway has increased its stake in Japan’s five largest general trading companies to over 8.5 per cent and has expressed its intention for long-term investment plans.

The move comes as Berkshire Hathaway raised its stake in Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co, and Sumitomo Corp, signalling its commitment to holding these investments for an extended period.

This recent development follows Warren Buffett’s announcement a few weeks ago that his company would be increasing its stakes in Japanese companies, causing their stock prices to soar to record highs.

However, Buffett has made it clear that Berkshire Hathaway will not purchase more than 9.9 per cent of any of the companies.

According to an official press release from Berkshire Hathaway, the company’s stake in the five Japanese trading houses now averages over 8.5 per cent.

The release also stated, “Depending on price, Berkshire Hathaway may increase its holdings up to a maximum of 9.9 per cent in any of the five investments. The company will make no purchases beyond that point unless given specific approval by the investee’s board of directors.”

Warren Buffett’s interest in Japanese stocks has been evident, as he travelled to Japan earlier this year and held meetings with executives from the trading firms.

During an interview with Nikkei in April, Buffett mentioned that his stake in each of Japan’s five main trading companies had risen to 7.4 per cent. His initial investment in these trading houses dates back to August 2020.

The trading houses, known as “sogo shosha” in Japan, engage in various businesses ranging from gas trading to salmon farming.

They experienced a surge in profits in the previous fiscal year due to high commodity prices and the weak yen.

In addition to increasing its stake in Japanese trading companies, Berkshire Hathaway has also begun marketing bonds in the Japanese currency.

This move aligns with the company’s strategy of expanding its presence in the Japanese market and adds to the more than 1 trillion yen of bonds it has issued in recent years.

Warren Buffett’s continued interest in Japanese stocks and the increased stake in the country’s trading houses not only signifies his confidence in the long-term potential of these companies but also serves as a testament to the attractiveness of the Japanese market for international investors.