Warren Buffett’s Berkshire Hathaway is planning to increase its investments in Japan’s five largest trading houses. According to the Financial Times, Buffett sees these companies as long-term investments and intends to hold these stakes for decades. This news sent shares of the trading giants soaring by up to 9% on Tuesday.
Why Buffett is Interested
Buffett’s interest in these companies isn’t surprising. Japan’s trading houses—Mitsubishi Corporation, Mitsui, Marubeni, Sumitomo, and Itochu—have evolved from traditional commodity traders to highly diversified conglomerates. They now own businesses ranging from convenience stores to technology startups and even salmon farms. With portfolios containing hundreds of companies, some exceeding 1,300, these trading giants are like Japan’s version of private equity firms but with a longer investment horizon.
In 2020, Berkshire disclosed a 5% stake in each of these companies, costing over $6 billion in total. Since then, the value of these holdings has nearly doubled to $23.5 billion. Buffett revealed in his latest annual letter that Berkshire had reached an agreement with these companies to ease the previous 10% cap on investments. This means Berkshire is likely to buy more shares in the future.
Strategic Timing and Market Reaction
This move comes at a time when Japan is becoming more attractive to global investors. A decade of corporate governance reforms and a return of inflation after years of stagnant prices have drawn fresh attention to Japanese stocks. By signaling his intention to buy more shares, Warren Buffett is effectively betting on Japan’s economic resilience and the trading houses’ ability to navigate changing markets.
After the announcement, shares in Mitsubishi jumped nearly 9%, while Mitsui, Marubeni, Sumitomo, and Itochu also saw significant gains ranging from 4% to 7.5%. These spikes reflect investor optimism about Berkshire’s long-term commitment to these firms.
What’s in it for Warren Buffett’s Berkshire?
Warren Buffett isn’t just buying these stocks for their growth potential. In his letter, he pointed out that Berkshire expects $812 million in dividends from these holdings in 2025. This focus on dividend income highlights how Japanese companies are increasingly prioritizing investor returns—a trend that wasn’t as common in the past.
These trading houses also align well with Berkshire’s broader investment strategy. They are flexible enough to exit declining industries and pivot to high-growth sectors, making them a safe and adaptable long-term bet. Mitsubishi, for example, has been in talks with Berkshire about potential joint investments, which could open doors to new business opportunities in infrastructure and energy—areas where Berkshire already has a global presence.
The Bigger Picture
Warren Buffett’s increased interest in Japan’s trading houses isn’t just about financial returns. It also reflects the changing geopolitical landscape. As the U.S. and Japan strengthen economic ties, these trading giants are positioned to benefit. According to analysts, these companies could play a key role in U.S.-Japan collaborations, especially in energy and infrastructure projects.
With Japan looking to import more energy from the U.S., and the U.S. seeking financial and technical support from Japan, the trading houses are strategically placed at the center of this economic relationship. This makes them not just good investments but also key players in the evolving global trade dynamics.
Final Thoughts
Warren Buffett’s bet on Japan’s trading houses is a strategic move that combines his preference for long-term investments with the evolving opportunities in global markets. By choosing diversified and adaptable companies, he’s hedging against economic uncertainties while positioning Berkshire to benefit from the next wave of growth in Asia.
