TOKYO – Billionaire investor Warren Buffett’s Berkshire Hathaway said Monday it has taken stakes of just over 5% in five major Japanese trading houses in what it says is a long-term investment.
Share prices of the five huge companies surged between 4% to 9.5% on Monday in Tokyo after the company announced the investment.
Berkshire Hathaway said that its subsidiary National Indemnity Co. planned to notify regulators of the purchases that had been made over the past year.
The companies are Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp.
It said it might increase the stakes to up to 9.9% in any of the companies. It described them as “passive investments," noting that the company has held similar holdings in Coca-Cola, for 32 years; American Express, for 29 years and credit ratings agency Moody’s, for 20 years.
“I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,” Buffett said. “The five major trading companies have many joint ventures throughout the world and are likely to have more of these partnerships. I hope that in the future there may be opportunities of mutual benefit.”
The powerful trading houses are some of Japan’s oldest and biggest companies and the anchors of vast industrial groups called keiretsu.
Although the Japanese economy has been growing slowly for most of the past two decades and has been in recession since late last year, major companies have invested on a global scale and are cash-rich.
They are also viewed as relatively undervalued, with price to earnings ratios, in most cases, well below the average for markets in the U.S. and Japan.
Edward Jones analyst Jim Shanahan said the roughly $6 billion investment in the Japanese companies will allow Berkshire to profit when the economy performs well in the region.
“He found a very interesting way to invest in the broader trading activity in Asia and the south Pacific by investing in these companies,” Shanahan said.
Many investors follow what Berkshire buys and sells closely because of Buffett’s successful track record. Recently, Buffett has been criticized for not investing more of his company’s $147 billion cash during the market swoon that followed the coronavirus outbreak.
But Buffett has been more active this summer when Berkshire agreed to buy Dominion Energy’s natural gas pipeline and storage business for $4 billion, and he bought roughly $2.1 billion of Bank of America stock to give Berkshire control of nearly 12% of the bank’s stock.
Berkshire owns more than 90 companies, including BNSF railroad, Geico insurance and utility, furniture, manufacturing and jewelry businesses. The Omaha, Nebraska-based conglomerate also has major investments in such companies as Apple, U.S. Bancorp, Costco and Kraft Heinz.