Warren Buffett, the billionaire investor, has recently visited Japan for the first time in more than a decade and is focused on his increasing investments in the country. In August 2020, Buffett’s conglomerate Berkshire Hathaway announced that it had acquired slightly over 5% of each of Japan’s top five trading houses, which are Marubeni, Sumitomo Corp., Itochu, Mitsubishi Corp., and Mitsui & Co. According to a Reuters, by November 2022, Berkshire Hathaway had increased its stake in these businesses by around 1% each, with the house now owning 6.59% of Mitsubishi Corp., 6.62% of Mitsui & Co. Ltd., 6.21% of Itochu Corp., 6.75% of Marubeni Corp., and 6.57% of Sumitomo Corp.
Buffett appears to be looking to increase his stakes once again, as he has told Nikkei Asia in Tokyo that he is “really proud” of his investments in these companies, which are worth approximately $11 billion. He also said that he plans to meet with the companies this week “to really just have a discussion around their businesses and emphasize our support.”
Buffett has hinted that he may invest in other Japanese companies, as he considers investments in the region “always a matter of consideration.” Additionally, the share price of all five of Buffett’s current holdings has risen since he expressed his support for them.
Fellow conglomerates
Warren Buffett, the billionaire investor with a net worth of $110 billion, has expressed his satisfaction and pride over his investments in Japan’s top five trading houses: Itochu, Mitsubishi Corp., Mitsui & Co., Sumitomo Corp., and Marubeni. Berkshire Hathaway, Buffett’s global conglomerate, acquired just over 5% of each of the companies last year, with an additional 1% in each business by November 2022, bringing their stake to 6.59% in Mitsubishi Corp, 6.62% in Mitsui & Co. Ltd., 6.21% in Itochu Corp., 6.75% in Marubeni Corp., and 6.57% in Sumitomo Corp.
Buffett stated that he will be meeting with the companies to discuss their businesses and emphasize his support. He has also encouraged the companies to seek him out first for any additional support. The Japanese trading houses are viewed as too complicated to invest in, but Buffett sees them as similar to Berkshire Hathaway with their diverse portfolios ranging from health care to minerals to food. He has hinted that he is open to investing in other Japanese companies and believes that the region is always a matter of consideration for investments.
In favor of stock buybacks
Warren Buffett, the billionaire investor, is known for advocating share buybacks, and he has been vocal about his support for such schemes. He has even referred to those who criticize them as “economically illiterate” and “silver-tongued demagogues”. In Berkshire Hathaway’s annual letter, Buffett emphasized that share buybacks can result in better returns for all shareholders.
Buffett’s interest in his five Japanese holdings is no different. He has expressed his preference for companies that buy back their shares, stating that “If they are repurchasing their shares, we generally regard that as a plus. We like the idea of the number of shares going down.”
Interestingly, the Japanese trading houses that Buffett has invested in have shown that they are open to the practice of share buybacks. Mitsubishi Estate, for example, announced plans to buy back up to 100 billion yen ($913 million) of its shares in 2019, while Mitsui Fudosan, a former real estate subsidiary of Mitsui, announced a similar scheme the year before.
Overseas interest
Billionaire investor Warren Buffett has expressed his support for international investment but geopolitical tensions can be a hindrance, he said in an interview with Nikkei. This was highlighted when Berkshire Hathaway distanced itself from Taiwan Semiconductor Manufacturing Co. after acquiring more than $4bn in shares in the world’s largest chipmaker between July and September 2022. By the end of 2022, it had cut its holdings by 85% to $617m.
While Buffett described the company as well-managed, he said geopolitical tensions were a “consideration” in the divestment, but ultimately, his fund had better places to invest. Despite this, Buffett’s increasing ties to Japan suggest he won’t stop spending overseas. In his 2019 annual letter for Berkshire Hathaway, he emphasized the importance of international investment, saying that “Americans will be both more prosperous and safer if all nations thrive.”
