Warren Buffett’s bet on Japan’s leading trading companies is paying off handsomely as the Nikkei 225 surpassed 30,000 on Monday for the first time in almost 31 years.
Berkshire Hathaway’s purchase of just over 5% of Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp., were bought on the open market in 2020, and were first revealed in August 2020.
All the companies have moved up sharply over the past six months, with shares of Itochu Corp. up 27%, Marubeni Corp. up 29%, Mitsubishi Corp. up 25%, Mitsui & Co. 16%, and Sumitomo Corp. up 20%.
The combined stake was worth roughly $6.5 billion when it was announced on August 31, 2020.
The shares were purchased by Berkshire Hathaway’s wholly-owned National Indemnity Company, and the company said at the time that the intention was to hold its Japanese investments for the long term. Berkshire also disclosed that it may increase its holdings up to a maximum of 9.9% in any of the five investments.
The investment is not vulnerable to currency fluctuations, as Berkshire Hathaway has 625.5 billion of yen-denominated bonds outstanding, maturing at various dates beginning in 2023 and ending in 2060. Consequently, the company has only minor exposure to yen/dollar movements.
© 2021 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.