Warren Buffett’s Berkshire Hathaway Purchases 5% Stake in Five Leading Japanese Trading Companies

UTC by Steve Muchoki · 3 min read
Warren Buffett’s Berkshire Hathaway Purchases 5% Stake in Five Leading Japanese Trading Companies
Photo: Fortune Live Media / Flickr

Berkshire Hathaway chairman and CEO Warren Buffett announced that his company has purchased a 5% stake in five Japanese trading companies: Itochu, Marubeni, Mitsubishi, Mitsui & Co, and Sumitomo.

As the investors, countries and global economy prepare for post-COVID-19 era, Berkshire Hathaway Inc (NYSE: BRK.A), led by Warren Buffett has been focusing and where to put its vast cash deposits. As Buffett celebrated his 90th birthday, he announced that his company will make a strategic investment in five of the leading Japanese trading companies: Itochu Corp (OTCMKTS: ITOCY), Marubeni Corp (OTCMKTS: MARUY), Mitsubishi Corp (OTCMKTS: MSBHF), Mitsui & Co (OTCMKTS: MITSY), and Sumitomo Corp (OTCMKTS: SSUMY).

Coincidentally, all the shares of the said companies surged around 7% during the weekend. For Itochu, at the time of reporting, it was trading around 2724 JPY, up 4.19%. As for Marubeni shares, they were up 9.48% to trade around 640 JPY. On the part of Mitsubishi shares, they were up 7.72%, to trade around 2513 JPY.

Mitsui shares were up 7.35% to trade around 1914 JPY. And finally, for Sumitomo shares, they were up 9.09% to trade around 1375 JPY.

Warren Buffett’s Berkshire Hathaway and Five Japanese Companies

It is worth noting that all the five companies that Berkshire Hathaway has chosen have a long history with Japanese economic growth, where they have been in existence for approximately a century.

Buffett is considered one of the most successful investors, where he has been noted to be a long term investor. He believes that people should only buy stocks in companies that exhibit solid fundamentals, strong earnings power, and the potential for continued growth.

With his company purchasing over $6.5 billion worth of shares from the leading Japanese trading companies, it is an indicator that he has identified them to exhibit strong future fundamentals with strong earnings power and a bright future.

The Japanese economy shrank at an annual rate of 27.8% in April-June, which is the worst contraction on record due to the ongoing coronavirus pandemic, a lot of measures have been put in place to oversee a smooth recovery.

With the private investors rushing to take advantage of the available opportunities, the economy is perhaps set to see a better economy than pre-COVID.

Buffett who has been previously noted saying that an investor should be scared when others are greedy and vice versa is probably giving indicators that investors should gear up wisely their investment strategy as fear seems to grip harder.

The Japanese trading companies are conglomerates that have specialized in importing everything from energy and metals to food and textiles into resource-scarce Japan.

“I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,” said Mr. Buffett, adding that the trading houses have many joint ventures around the globe. “I hope that in the future there may be opportunities of mutual benefit,” he said.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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