Renowned investor Warren Buffet may have alerted online investors to a look at Japan funds after taking a major position on the Japanese economy. Buffet is famous for a USA-centric approach to his investing, which is consistent with his strategy of only investing in companies and sectors he believes he understands. But perhaps he is becoming more adventurous with age as he announced the $6 billion investment in five of Japan’s biggest trading houses on his 90th birthday.
Berkshire Hathaway, Buffet’s investment vehicle which is also one of the largest companies in the world, announced it has built up stakes of just over 5% in the trading houses Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo over the past years. The five companies, among the best known in Japan and collectively known as sogo shosha, all have diverse interests but also all have significant exposure to the energy sector and commodities from metals to noodles.
Mr Buffet commented:
“I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment. The five major trading companies have many joint ventures throughout the world and are likely to have more of these partnerships. I hope that in the future there may be opportunities of mutual benefit.”
Berkshire says its intention is to be a long-term investor but to not build stakes worth more than a maximum of 9.9% an any of the five companies. The share price of all five companies rose following the announcement.
The investment in Japan’s economy could be described as something of a contrarian investment, coming at a time of relative uncertainty around the country’s economy. Shinzo Abe, famous for a more progressive brand of economics involving greater fiscal stimulus than previously typical of Japan’s prime ministers, of which he was also the longest serving, retired last week due to ill-health. Whoever succeeds him will have to try to keep on with the economic improvement seen under Mr Abe but will first have to handle the fall-out of the Covid-19 pandemic.
Berkshire Hathaway itself has been one of the most successful company shares in the world over the past five and a half decades, returning average annual returns of around 20% since 1965. The company’s portfolio includes stakes in companies from Coca-Cola to General Motors and Apple. Its equity stakes were worth $207 billion as of the end of June.
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