Buffett‘s Japanโค Investments Soar, โขand JPMorgan Predicts Moreโ to Come
Warren Buffett’s investment โฃin โขJapan’s top five trading houses – Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo -โฃ is proving to be a remarkably prosperous venture, even as the “Oracle ofโ Omaha” approaches his 90s. Berkshire Hathaway began building positions in these companies in August 2020,acquiring over 5% stakes in each.
Since then, the stocks have moreโฃ then tripled in value, with one โขperformer surging over 500%, according to JPMorgan.The investmentโค bank attributes this dramatic growth, in part, to the โฃ”Buffett effect” – the โpositive market reaction to Berkshire’s involvement. JPMorgan notes that Berkshire’s presence as a โmajor shareholder has also โคincreased management’s focus on shareholder valueโ and strategic capital allocation.
As of the โend โof 2024, Berkshire’s initial $13.8 billion investment has grown toโฃ a market value ofโข $23.5 billion. Buffett initially discoveredโค these companies โฃwhileโข reviewing a directory of Japanese publicly traded firms, attracted by their low valuations, reliable dividends, โand diversified, cash-generating businesses.
Beyondโค capital thankfulness, the investment allows Buffettโ to effectively hedge โcurrency risk by capitalizing on the difference between dividendsโฃ earned โand interest paid on yen-denominated debt. โBerkshireโ anticipates $812 million in dividendโ income fromโฃ these investments in โข2025, offset by $135 million in interest payments.
JPMorgan believes Berkshire โฃisโข not โคfinished โinvesting in the sector, โexpecting continued, โคmoderate increases in their stakes. Berkshire has already exceeded the initial 10% ownershipโ ceiling in Mitsubishi โฃand Mitsui.Buffett has publicly stated his long-term commitment, declaring, “Weโ will not be selling any stock. Thatโ will not happen in decades, if then.” Heโ and his successor, Greg Abel, โview โฃthe investment โas a long-term hold, a testamentโ to the enduring appeal of these Japanese trading houses.
