One of the most interesting aspects of Warren Buffett’s letter to the Berkshire Hathaway shareholders is the stance on their investment in Japan. Berkshire will continue increasing its investments in Japan. As Buffett writes, “A small but important exception to our U.S.-based focus is our growing investment in Japan.”
Outlining their long-term commitment in these companies, Warren Buffett explained how they are planning to take the investments beyond the initial 10% ceiling that they had decided. Berkshire had invested in 5 Japanese companies 6 years ago in 2019. These included
-ITOCHU
-Marubeni
-Mitsubishi
-Mitsui
-Sumitomo
“Our holdings of the five are for the very long term, and we are committed to supporting their boards of directors,” wrote Buffett and explained how though they had “agreed to keep Berkshire’s holdings below 10% of each company’s shares. But, as we approached this limit, the five companies agreed to moderately relax the ceiling. Over time, you will likely see Berkshire’s ownership of all five increase somewhat.”
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At year end, Berkshire’s aggregate cost (in dollars) was $13.8 billion and the market value of our holdings totaled $23.5 billion. Meanwhile, “Berkshire has consistently – but not pursuant to any formula – increased its yen-denominated borrowings. All are at fixed rates, no ‘floaters’,” added the Oracle of Omaha.
Why Berkshire Hathaway invested in these 5 Japanese companies?
Berkshire had made its purchases in these five stocks in July 2019. These 5 companies are among the biggest “Sogo-Shosha” enterprises in Japan, meaninglage trading houses. Each of these large enterprises, in turn, owns interests in a vast array of businesses, many based in Japan but others that operate throughout the world. “ We simply looked at their financial records and were amazed at the low prices of their stocks. As the years have passed, our admiration for these companies has consistently grown,” added Buffett explaining the investment rationale.
According to Buffett, between him and Greg Abel (who is set to succeed Buffett), they have met the management of all these 5 companies many times and regularly follow their progress. “Both of us like their capital deployment, their managements and their attitude in respect to their investors.
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