NEW YORK: Warren Buffett says that his conglomerate Berkshire Hathaway will likely increase its ownership in the five Japanese trading houses it holds.
In his annual letter to Berkshire shareholders, the billionaire investor said Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo agreed to “moderately relax” limits that capped Berkshire’s ownership stakes below 10%. Berkshire’s investments in the companies totalled US$23.5bil at the end of 2024.
“Over time, you will likely see Berkshire’s ownership of all five increase somewhat,” Buffett wrote.
The 94-year-old Buffett also said he and Berkshire vice-chairman Greg Abel, his designated successor as chief executive, are investing for the “very long term.”
“I expect that Greg and his eventual successors will be holding this Japanese position for many decades and that Berkshire will find other ways to work productively with the five companies,” Buffett wrote.
“Both of us like their capital deployment, their managements and their attitude in respect to their investors,” Buffett added.
Known as “sogo shosha,” Japanese trading houses trade in a wide variety of materials, products and food, often serving as intermediaries, and provide logistical support.
They are also deeply involved in the real economy in such areas as commodities, shipping and steel. Berkshire began investing in the trading houses in 2019, drawn by their finances compared to their low stock prices, and revealed 5% ownership stakes on Buffett’s 90th birthday in August 2020.
Buffett prefers to avoid businesses he says he does not understand.
He told Nikkei in 2023 that the trading houses are “really so much similar to Berkshire,” the Omaha, Nebraska-based conglomerate he has led since 1965.
Berkshire spent US$13.8bil on its current holdings and expects US$812mil of dividend income in 2025, Buffett said in the shareholder letter.
“This was a good value investment when others may have looked at them as value traps,” said Cathy Seifert, an analyst at CFRA Research who rates Berkshire a “hold.” — Reuters