Berkshire Hathaway increases stakes in five Japanese trading houses to near 10%

In recent months, Warren Buffett’s Berkshire Hathaway has significantly increased its investments in Japan, raising its stakes in five major trading houses known as sogo shosha. These companies—Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo—received added investment, marking a rise of over 1 percentage point each, which brings Berkshire's holdings to between 8.5% and 9.8%. This move was disclosed within a regulatory filing, indicating a strategic shift towards engaging more deeply with Japan's business sector. Buffett has expressed a strong commitment to maintaining these investments for the long term, revealing in his annual letter for 2024 that Berkshire has reached an agreement with these firms allowing it to exceed an initial 10% limit on ownership. The rationale for this approach stems from Buffett's belief in the management quality and capital allocation strategies of these companies, which resonate with his investment philosophy. Berkshire first entered this market segment during the summer of 2019, and Buffett has increasingly praised the management and investor relations of these trading houses. They operate across a wide range of sectors both domestically in Japan and internationally, which mirrors Berkshire’s diversified investment style. Buffett initially declared his interest in these Japanese firms on his 90th birthday back in August 2020, noting how the investment opportunities captivated him. By the close of 2024, the market value of Berkshire’s Japanese investments is projected to be approximately $23.5 billion, accumulated at an aggregate cost of $13.8 billion. During his recent visit to Japan in 2023, which included meetings with the heads of these firms and the presence of his successor Greg Abel, Buffett further solidified his vision for Berkshire to maintain ownership of these companies indefinitely.