BERKSHIRE HATHAWAY BUYS INTO JAPAN’S TOP TRADING HOUSES
Warren Buffett’s Berkshire Hathaway has acquired a slightly more than 5% stake in each of the five leading Japanese trading companies Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp. over a roughly 12-month period through regular purchases on the Tokyo Stock Exchange.
Based on Friday’s closing prices for the trading houses, a 5% stake in each would be valued at roughly $6.25 billion, Becky Quick reported for Consumer News and Business Channel (CNBC) late on August 31, 2020.
Berkshire says it intends to hold the investments for the long term, and that it may increase its holdings in any of the companies up to a maximum of 9.9%, depending on the price. The chairman and CEO of Berkshire Hathaway announced Sunday — his 90th birthday — that his company has acquired a slightly more than 5% stake in each of the five leading Japanese trading companies. In describing its intentions for the investment in the trading houses, Berkshire pointed to its history of long-term, passive holdings in companies like Coca-Cola Co., American Express Co., and Moody’s Corp., which each span multiple decades. “I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,” said Buffett, adding that the trading houses have many joint ventures around the globe. “I hope that in the future there may be opportunities of mutual benefit.
The Japanese trading companies — known as sogo shosha — are conglomerates that import everything from energy and metals to food and textiles into resource-scarce Japan. They also provide services to manufacturers. The trading houses have helped grow the Japanese economy and contributed to the globalization of its business. But as they have extended their footprint overseas, they’ve also become more vulnerable to global predicaments, like the financial crisis from a decade ago. The trading houses also face increasing competition from venture capitalists and private equity funds.