Berkshire Hathaway Chairman and CEO Warren Buffett filmed during a trip to Japan in 2011.
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Warren Buffett said in an annual letter to shareholders on Saturday that Berkshire Hathaway has long been committed to its Japanese investment and has reached an agreement with the company to surpass the original 10% upper limit.
“From the beginning, we also agreed to put Berkshire’s holdings below 10% of each company. However, with our restrictions, the five companies agreed to moderately relax the cap.” As time goes by, you may see an increase in ownership of all five people at Berkshire.”
The Japanese name in Berkshire’s portfolio is Itochu,,,,, Marubeni,,,,, Mitsubishi,,,,, Mitsui and Shumito. Buffet said the five are the largest “Sogo Shosha” or Japanese deal houses, which are invested in various departments at home and abroad, “a little similar to Berkshire itself,” Buffet said. Berkshire first acquired the companies in July 2019.
By the end of 2024, Berkshire’s Japanese holdings had a market value of US$23.5 billion, with a total cost of US$13.8 billion. Investors highlight the company’s managers, their relationships with investors, and their capital deployment strategies.
Houses in Japan in the past year
Buffett has sold Japanese debt to fund Berkshire’s shares in Japanese companies. The issuance of bonds timed by Japanese yen also allows Buffett to reduce the risk associated with foreign exchange. Berkshire reports that after-tax earnings for Japanese bonds are $2.3 billion, of which $850 million is only in 2024, and the strength of this bond is about 11% in 2024 due to the strength of the dollar. .
“We like the current math of the yen balance strategy,” Buffett said, adding that the designated successor “Greg (Abel) and I have no idea about future foreign exchange rates and therefore seek an approximate currency neutral position.”
Omaha’s Oracle predicts annual dividend income of its shares in five Japanese trading institutions will be about $812 million.
“I hope Greg and his ultimate successor will hold this Japanese position for decades, and Berkshire will find other ways to work with five companies in the future,” Buffett said.
To be sure, five Japanese trading companies have been struggling over the past year. At that time, Itochu and Marubeni fell by more than 8%, while Mitsubishi fell by 26%. During this period, Mitsui and Sumitomo lost 16% and 10% respectively.
