Berkshire Hathaway Inc. raised its stake in five of Japan’s trading houses to an average of over 8.5%, 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 on Monday. Buffett, the chairman of Berkshire, said in April that the firm would boost stakes in the Japanese companies, prompting their stock prices to rise to record highs.
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% this year, overtaking electric appliance makers.
Mitsubishi and other Japan-based firms with exposure to commodities have been using proceeds from last year’s surge in energy prices to carry out buyback programs.
The upside for those firms’ stocks and Japanese equities overall, however, may be limited from here as the market has already factored in further purchases by Buffett, according to Hiroshi Namioka, chief strategist at T&D Asset Management Co Ltd.
Berkshire plans to increase investments to up to 9.9% 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,” according to the release.
--With assistance from Stephen Stapczynski.
©2023 Bloomberg L.P.
