From Morningstar: 2025-05-06 05:42:00

Warren Buffett’s investments in Japanese trading companies ITOCHU, Marubeni, Mitsubishi, Mitsui, and Sumitomo have proven successful since July 2019. Buffett saw value in the conglomerates’ diverse businesses and low stock prices. Despite trade war risks and tariffs, Berkshire Hathaway has benefited from the companies’ global presence and shareholder-friendly policies.

Valuations for Japan’s trading companies remain attractive, with low price-to-earnings and price-to-book ratios compared to the S&P 500. Total yield, including dividends and buybacks, is also appealing for investors. Buffett’s strategy of borrowing in yen at low rates provides a margin of safety and enhances returns on his investments in Japanese equities.

Berkshire Hathaway plans to buy more shares of the Japanese trading companies for the long term. Buffett has already increased his holdings in Mitsui, Mitsubishi, Sumitomo, Itochu, and Marubeni this year. The companies have agreed to relax ownership limits for Berkshire, allowing for potential further increases in shareholdings. Buffett’s positive view on Japanese equities reflects confidence in their long-term growth potential. Berkshire Hathaway now holds a stake between 8.5% and 9.8% in five Japanese trading companies, expressing growing admiration for their capital deployment and management. The companies increase dividends when appropriate, repurchase shares sensibly, and have less aggressive compensation programs than U.S. counterparts. Collaboration opportunities with Berkshire are also possible. Valuations are becoming more attractive as book value increases with unrealized gains on investment assets.



Read more at Morningstar: Why Warren Buffett Likes the Japanese Trading Companies