Warren Buffett Continues to Increase Stake in Japan's Top 5 General Trading Companies

3x Increase Since Acquisition in August 2020

'The Sage of Omaha,' Warren Buffett, CEO of Berkshire Hathaway, is continuously increasing his stake in Japan's five major general trading companies.

On the 16th (local time), Masayuki Hyodo, CEO of Sumitomo Corporation, who visited Switzerland to attend the World Economic Forum (WEF, Davos Forum), said in an interview with the U.S. economic magazine Barron's, "Not only Sumitomo but also the stakes of CEO Buffett in all five general trading companies are increasing daily."

Warren Buffett, Chairman and CEO of Berkshire Hathaway, USA [Image source=Yonhap News]

In August 2020, Buffett's investment company Berkshire Hathaway disclosed that it had acquired more than 5% stakes in each of Japan's five major general trading companies: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. Later, in June of last year, it announced that the average stake had increased to over 8.5%. Since then, it has continued to purchase shares. At that time, the value of Berkshire CEO's holdings in the five major general trading companies was approximately $20 billion. The stock prices of the five major general trading companies have surged about threefold since August 2020.

However, at the time of disclosing the stake, Berkshire CEO stated that unless separately approved by the board, it would only purchase up to 9.9% stakes in each of the five general trading companies.

Charlie Munger, Vice Chairman of Berkshire who passed away in November last year, also praised the investment in Japanese general trading companies in a past interview. Japan's 10-year government bond yield is only 0.5%, and the Japanese general trading companies are economically solid and long-established firms. Investing in these companies, which borrow money at a 0.5% interest rate and pay a 5% dividend, can generate massive cash flow.

Munger said, "Even if you are as smart as CEO Buffett, coming up with such an investment idea (investing in Japan's five major general trading companies) would only happen once or twice in a hundred years."

This content was produced with the assistance of AI translation services.