Berkshire Hathaway Signals Intent to Boost Stakes in Japan's Top Trading Houses

Berkshire Hathaway is considering increasing its stakes in Japan’s five largest trading houses, CEO Greg Abel told the Nikkei in an interview published Thursday. The news sent shares of the Japanese conglomerates surging, signaling continued confidence from the U.S. investment giant in the country's diversified business sector.

Abel Affirms Buffett's Strategy

Abel expressed confidence in the growth prospects of the trading houses and stated that Berkshire planned to further increase its holdings, according to the Nikkei report. This follows the strategy initiated by former CEO Warren Buffett, who first invested in the companies in 2019.

Berkshire Hathaway's current holdings are in:

• Itochu Corp. (TYO:8001)
• Marubeni Corp. (TYO:8002)
• Mitsui & Co., Ltd. (TYO:8031)
• Sumitomo Corp. (TYO:8053)
• Mitsubishi Corp. (TYO:8058)

Last year, Berkshire increased its holdings in the companies to between 9% and 11% after reaching agreements with them to potentially raise its stakes beyond 10%.

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Market Reaction

The report immediately boosted the stock prices of the five trading houses in Thursday's trading session. Shares of Mitsubishi Corp. and Sumitomo Corp. led the gains, each rising by nearly 5%. The positive market reaction underscores the influence of Berkshire's investment decisions on investor sentiment.

Background on the Investment

Warren Buffett began investing in the five Japanese companies, known as *sogo shosha*, in 2019, attracted by their strong financials, accessible valuations, and a weaker yen at the time. These companies are massive conglomerates with diverse holdings across a wide variety of sectors.

According to Berkshire's most recent annual report, its combined holdings in the five firms were valued at $35.37 billion. The investments generated $862 million in dividend income for Berkshire during the year. The largest single position was a 10.8% stake in Mitsubishi, valued at $9.21 billion.