warren buffett Resentment may arise among officials when he invests in them companies,
Japanese trading companies make this clear. Berkshire Hathaway Inc. bought a stake in them in August 2020, raising their international profile and attracting other investors. Over the next four years, five companies outperformed the broader market.
However, Buffett’s influence can cut both ways. When Berkshire Hathaway reduced its stake Taiwan Semiconductor Manufacturing Company Due to geopolitical risks last year, the chip maker’s shares fell sharply as other investors followed suit. With that example in mind, Japan’s trading companies are now taking steps to try to minimize the impact if Buffett decides to sell.
“We don’t think Berkshire will hold our shares forever,” said Yoshinori Takayama, head of investor relations at Sumitomo Corp. “We are aiming to diversify our shareholdings, taking into account the risks of a sell-down.”
There is no easy way to do this. Berkshire is one of the largest shareholders of all five of the country’s largest trading companies. Its stakes in Itochu Corp, Sumitomo Corp, Mitsubishi Corp, Mitsui & Co and Marubeni Corp range between 7.5% and 8.4%.
Berkshire has given no indication that it plans to sell. Buffett traveled to Japan last April to meet with executives and then increased his stake in trading companies. Berkshire has raised funds by selling a total of 1.3 trillion yen ($8.8 billion) of bonds in Japan. The latest was a 122 billion yen note in November last year. Buffett has said he wants more exposure to Japanese stocks, but will limit his stake in trading companies to a maximum of 9.9% unless specific approval is given by the company’s board.
Additionally, Buffett famously trusts management to run companies and his vote of support could reassure the broader market, as was the case when he took a stake in Goldman Sachs Group Inc. at the height of the financial crisis in 2008. He reduced his stake in the bank to help pay for Berkshire’s acquisition of Precision Castparts Corp. in 2015.
Most Japanese business firms have their roots in the late 19th century, when the country ended samurai rule and sought development through industrialization and the adoption of Western practices. Their profits have historically been driven by strong commodity markets. Last year, earnings were helped by diversification into food and infrastructure.
A gauge representing the sector on the Topix index rose 39% last year, outpacing the 25% gain in the broader measure. Buffett has invested about 1.3 trillion yen in companies, according to calculations using data compiled by Bloomberg and stock prices at the time the investments were announced. His stake is currently worth about 3.2 trillion yen.
“It is not impossible to sell when the stock price goes high Investment Becomes less attractive,” said Hiroshi Namioka, chief strategist at T&D Asset Management. He said the market does not expect Buffett to sell, but since his style is value investing, it cannot be ruled out.
Berkshire declined to comment on its investments in Japanese trading companies. Buffett has said that he prefers to invest in Japan rather than Taiwan because there is less risk of trade disruption from tensions between China and the US. He cut his stake in TSMC for the same reason, even as he called the Taiwanese company one of the best-managed companies in the world. TSMC shares have risen since then.
In addition to broadening their shareholder base, companies are also trying to create new businesses to boost earnings and attract growth investors. Mitsui is highlighting areas such as health care and new energy in talks with shareholders, according to Hideki Konishi, general manager of the company’s investor relations division.
Investor relations officials at Mitsubishi and Marubeni also said the companies are trying to expand their shareholder base. Mitsubishi held a 3-for-1 stock split effective January 1 to lower its share price and attract more retail investors. The buyback has helped make Itochu the largest holder of its shares.
According to Hideki Kuribara, senior analyst at Tokai Tokyo Research Institute, who has been covering trading companies for nearly 18 years, companies’ earnings potential is ultimately the best protection against the negative impact of Berkshire reducing its holdings.
“The profit structure of companies is the best it has ever been,” Kuribara said. If Buffett ever decides to leave, there will be increased support for better management as well as expansion beyond commodities and decarbonization. “If Buffett sells, some investors will follow, but fundamentals like earnings are more important.”
Japanese trading companies make this clear. Berkshire Hathaway Inc. bought a stake in them in August 2020, raising their international profile and attracting other investors. Over the next four years, five companies outperformed the broader market.
However, Buffett’s influence can cut both ways. When Berkshire Hathaway reduced its stake Taiwan Semiconductor Manufacturing Company Due to geopolitical risks last year, the chip maker’s shares fell sharply as other investors followed suit. With that example in mind, Japan’s trading companies are now taking steps to try to minimize the impact if Buffett decides to sell.
“We don’t think Berkshire will hold our shares forever,” said Yoshinori Takayama, head of investor relations at Sumitomo Corp. “We are aiming to diversify our shareholdings, taking into account the risks of a sell-down.”
There is no easy way to do this. Berkshire is one of the largest shareholders of all five of the country’s largest trading companies. Its stakes in Itochu Corp, Sumitomo Corp, Mitsubishi Corp, Mitsui & Co and Marubeni Corp range between 7.5% and 8.4%.
Berkshire has given no indication that it plans to sell. Buffett traveled to Japan last April to meet with executives and then increased his stake in trading companies. Berkshire has raised funds by selling a total of 1.3 trillion yen ($8.8 billion) of bonds in Japan. The latest was a 122 billion yen note in November last year. Buffett has said he wants more exposure to Japanese stocks, but will limit his stake in trading companies to a maximum of 9.9% unless specific approval is given by the company’s board.
Additionally, Buffett famously trusts management to run companies and his vote of support could reassure the broader market, as was the case when he took a stake in Goldman Sachs Group Inc. at the height of the financial crisis in 2008. He reduced his stake in the bank to help pay for Berkshire’s acquisition of Precision Castparts Corp. in 2015.
Most Japanese business firms have their roots in the late 19th century, when the country ended samurai rule and sought development through industrialization and the adoption of Western practices. Their profits have historically been driven by strong commodity markets. Last year, earnings were helped by diversification into food and infrastructure.
A gauge representing the sector on the Topix index rose 39% last year, outpacing the 25% gain in the broader measure. Buffett has invested about 1.3 trillion yen in companies, according to calculations using data compiled by Bloomberg and stock prices at the time the investments were announced. His stake is currently worth about 3.2 trillion yen.
“It is not impossible to sell when the stock price goes high Investment Becomes less attractive,” said Hiroshi Namioka, chief strategist at T&D Asset Management. He said the market does not expect Buffett to sell, but since his style is value investing, it cannot be ruled out.
Berkshire declined to comment on its investments in Japanese trading companies. Buffett has said that he prefers to invest in Japan rather than Taiwan because there is less risk of trade disruption from tensions between China and the US. He cut his stake in TSMC for the same reason, even as he called the Taiwanese company one of the best-managed companies in the world. TSMC shares have risen since then.
In addition to broadening their shareholder base, companies are also trying to create new businesses to boost earnings and attract growth investors. Mitsui is highlighting areas such as health care and new energy in talks with shareholders, according to Hideki Konishi, general manager of the company’s investor relations division.
Investor relations officials at Mitsubishi and Marubeni also said the companies are trying to expand their shareholder base. Mitsubishi held a 3-for-1 stock split effective January 1 to lower its share price and attract more retail investors. The buyback has helped make Itochu the largest holder of its shares.
According to Hideki Kuribara, senior analyst at Tokai Tokyo Research Institute, who has been covering trading companies for nearly 18 years, companies’ earnings potential is ultimately the best protection against the negative impact of Berkshire reducing its holdings.
“The profit structure of companies is the best it has ever been,” Kuribara said. If Buffett ever decides to leave, there will be increased support for better management as well as expansion beyond commodities and decarbonization. “If Buffett sells, some investors will follow, but fundamentals like earnings are more important.”
