Billionaire investor Warren Buffett is visiting Japan for the first time in more than a decade, and his thoughts are on his large—and growing—investments in the East Asian nation.
In August 2020, Buffett's global conglomerate Berkshire Hathaway revealed it had acquired just over 5% of each of the country's top five trading houses: Itochu, Mitsubishi Corp., Mitsui & Co., Sumitomo Corp., and Marubeni.
By November 2022, Berkshire Hathaway had increased that again, by around 1% in each of the businesses, according to Reuters. A regulatory filing showed the house now owns 6.59% in Mitsubishi Corp, 6.62% in Mitsui & Co. Ltd., 6.21% in Itochu Corp., 6.75% in Marubeni Corp., and 6.57% in Sumitomo Corp.
It seems that Buffett is looking to increase those stakes again, telling Nikkei Asia in Tokyo he is "really proud" of the investments, which are valued at around $11 billion.
The nonagenarian added that he'll be meeting with the companies this week "to really just have a discussion around their businesses and emphasize our support."
He added: "At the moment, we only own the five trading companies. There are always a few I'm thinking about." Other investments in Japanese companies aren't out of the question, he hinted, saying investments in the region are "always a matter of consideration."
The share price of all five of Buffett's current concerns has spiked since he expressed his support in the assets.
Fellow conglomerates
Buffett, who is worth $110 billion according to Bloomberg's Billionaires Index, has also put pressure on the companies to come to him first for any additional support: "We don't think it's impossible that we will partner with them at some point in the future in a specific deal.
"We would love if any of the five would come to us ever and say, We're thinking of doing something very big, or we're about to buy something and we would like a partner, or whatever."
The Japanese trading houses, which are themselves investment companies like Berkshire, have diverse portfolios that range from health care to minerals to food—apparently one of the reasons they caught the eye of the Coca-Cola investor.
"We feel that these five companies are a cross-section of not only Japan but of the world," Buffett explained to Nikkei in Tokyo. "They are really so much similar to Berkshire. They own a lot of different things."
Across the globe companies like these—called sogo shosha—are often viewed as too complicated to invest in. Itoshu, for example, invests and trades in food, apparel, and retail; Marubeni in food, pulp, and power; Mitsui in energy, metals, and health care.
Berkshire has a similarly wide-spanning portfolio: Its top stocks include Apple, Bank of America, Chevron, Coca-Cola, and American Express.
In favor of stock buybacks
The Kraft Heinz investor is a vocal advocate of share buybacks. In Berkshire Hathaway's annual letter he said critics of such schemes are "economically illiterate," insisting the activity resulted in better returns for all shareholders.
“When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive)," the Oracle of Omaha explained.
“The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices,” he added. “Gains from value-accretive repurchases, it should be emphasized, benefit all owners—in every respect.”
Speaking on his five Japanese interests, Buffett said this week: "If they are repurchasing their shares, we generally regard that as a plus. We like the idea of the number of shares going down."
Conveniently for the billionaire, sogo shosha have proved they're open to the practice. In 2019 the Mitsubishi Estate announced plans to buy back up to 100 billion yen ($913 million) of its shares in its first-ever stock repurchase, while the former real estate subsidiary of Mitsui—Mitsui Fudosan—announced a similar scheme the year before.
Overseas interest
Buffett has long been a supporter of international investment but revealed in the Nikkei interview geopolitical tensions can get in the way.
He said that such tensions were a factor in Berkshire Hathaway's distancing itself from from Taiwan Semiconductor Manufacturing Co. after having bought more than $4 billion in shares in the world's biggest chipmaker between July and September 2022.
By the end of 2022, it had slashed its holdings by 85%—down to $617 million.
Buffett described the business as well-managed, adding that geopolitical tensions were a "consideration" in the divestment but said ultimately his fund had better places to spend their money.
With increasing ties to Japan, it's clear Buffett won't be put off his habit of spending overseas. His 2019 annual letter for Berkshire Hathaway made his point clear: “It is beyond arrogance for American businesses or individuals to boast that they have ‘done it alone’. Americans will be both more prosperous and safer if all nations thrive. At Berkshire, we hope to invest significant sums across borders.”
