Berkshire Hathaway has increased its investments in Japan’s major trading houses. The buying began in August 2020, when Berkshire acquired just over 5% in five firms, including Mitsubishi Corp. and Mitsui & Co.
In April 2023, the stakes were increased to over 7%, with hints of potential further investments. By November 2023, these stakes rose to approximately 9%.
Rising Investment Levels
Recent filings to Japan’s finance ministry indicated that Berkshire’s average holding in these trading houses reached around 9.3%. This trend reflects a sustained interest in Japan’s trading sector.
Buffett’s approach has been clear. The gradual increase in Berkshire’s holdings suggests long-term confidence in these businesses. These companies, central to Japan’s resource and commodity trade, benefit from global supply chain shifts and energy demand. They also maintain strong dividends, which align with Berkshire’s historical preference for steady returns.
Rather than quick speculation, the strategy leans towards patience. Expanding positions over time, rather than making abrupt moves, reduces risk while maintaining exposure to growth. The lack of sudden exits implies that the holdings are not merely opportunistic but part of a broader plan. With Japan’s economy showing resilience and corporate reform gaining momentum, these positions appear well placed.
Market participants will need to keep an eye on potential follow-up moves. If Berkshire continues acquiring shares, valuations across the sector could adjust accordingly. Increased foreign involvement in these firms may also encourage better governance and higher shareholder returns.
Market Dynamics And Future Prospects
The timing of these purchases is not coincidental. The yen’s relative weakness has made Japanese assets more attractive. Lower valuations in Tokyo, compared to other developed markets, have provided additional reasons for global investors to take notice. As long as these conditions persist, further expansion remains a distinct possibility.
While Tokyo’s trading houses have historically been seen as complex entities with broad operations, their recent outperformance has challenged prior assumptions. Their ability to manage commodity cycles, coupled with disciplined capital allocation, has contributed to renewed investor interest. If global demand for resources remains steady, they could see further tailwinds in the months ahead.
Any adjustments to Berkshire’s holdings from this point forward will require scrutiny. Even if additional purchases slow, the existing stakes are already large enough to shape market sentiment. Watch for any commentary from Buffett himself, as that could offer more insights into whether this trend will continue or if Berkshire sees sufficient exposure at current levels.
