Berkshire Hathaway Inc raised its stake in five of Japan’s trading houses to an average of more than 8.5 percent, in a move to double down on some of Warren Buffett’s favorite stocks.
Berkshire holds stakes in Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co and Sumitomo Corp, the US insurer said in a release yesterday.
Buffett, the chairman of Berkshire, in April said that the firm would boost stakes in the Japanese companies, prompting their stock prices to rise to a record high.
Photo: Bloomberg
Buffett traveled to Japan in April to convene with executives from the trading firms for the first time in a whirlwind of meetings that both sides proclaimed as a success.
The conglomerates, which do everything from gas trading to salmon farming, announced a surge in profits last fiscal year on the back of high commodity prices and the weak yen.
The billionaire investor’s endorsement, combined with signs of stable inflation and better shareholders returns including buybacks have helped propel Japanese stock to a 33-year high.
The TOPIX Wholesale Trade Index — which includes Mitsubishi and other peers — has soared 39 percent this year, overtaking electric appliance makers.
The upside might be limited from here as the market has already factored in further purchases by Buffett, T&D Asset Management Co chief strategist Hiroshi Namioka said.
“It is unlikely to have a further significant positive impact on Japanese equities as a whole from here,” he said.
Berkshire plans to increase investments to up to 9.9 percent of each of the five Japanese firms.
“The company will make no purchases beyond that point unless given specific approval by the investee’s board of directors,” the release said.
Interest in Japan is surging as fears of sudden tech crackdowns in China prompt investors to re-evaluate Tokyo’s slower pace of change.
Buffett’s interest in Japanese trading houses has prompted more investors to look at different asset classes there, including private equity and venture capital, Coral Capital Inc chief executive officer James Riney said in an interview with Bloomberg TV yesterday.
“When it comes to investing on long-term time horizons, these investors want predictability,” he said. “Right now, China is not offering that. Japan is offering that.”
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