Buffett has increased stakes in two Japanese companies. Why does he love "shogo shosha"?

Warren Buffett through the investment company Berkshire Hathaway increased stakes in two Japanese trading houses. The deal brings his stake in Japan's Mitsubishi Corporation to more than 10% for the first time. Buffett began investing in major trading conglomerates in 2019 and promised not to sell shares for the next 50 years.

National Indemnity Company, a 100% subsidiary of Berkshire, increased from 9.7% to 10.2% its stake in Mitsubishi Corporation, one of the five "sogo shosha" - the largest trading houses in Japan. The news sparked a jump in quotes across the sector, with Mitsubishi securities, which had fallen in Tokyo in the morning, soaring 2.9% after the lunch break to their highest intraday level since July 2024, the Nikkei reported. Shares of four other "sogo shosha" - Mitsui, Itochu, Marubeni and Sumitomo - rose 1.6-3.5%, Bloomberg reports.

Mitsui, in turn, said Berkshire had acquired its shares as well, but its ownership is still less than 10%. As of March 2025, Buffett's investment company controlled 9.82% of Mitsui's shares.

Buffett has started investing in Japan's top five trading houses in 2019. These companies have diversified business portfolios ranging from oil and gas production to salmon farming and convenience store chains. Initially, the "oracle of Omaha" pledged to keep their stakes below 10%. But in February 2025, Buffett said in his annual letter to investors that the Sogo Shosas had agreed to "moderately" relax that limit. In March, Berkshire increased its stakes in each to nearly 10%.

Buffett's investments in Japan's largest trading houses are considered a so-called value play (betting on undervalued assets). Before him, the Sogo Shosha seemed to global investors an unwieldy and overly complex investment idea, a far cry from clear and single-sector-focused companies. "We studied their financial statements and were amazed at their low stock prices," Berkshire's CEO recalled in a recent letter to shareholders.

Back in 2023, Buffett told the Nikkei that he was "very proud" of his investments in Japanese conglomerates. In Ma 2025, he promised Berkshire shareholders: "In the next 50 years, we won't even think about selling them.

While the Sogo Shosha, due to the multifaceted nature of their business, suffer from global trade wars, they have attractive traits that can offset the downsides - in particular, an increasingly shareholder-friendly policy of dividend increases and share repurchases, investment-rating agency Morningstar noted in April 2025. Buffett is particularly attracted to the "margin of safety" provided by cheap yen-denominated loans, the agency emphasized.

Over the past five years, Japan's Nikkei 225 stock index has risen 87%. Over the same period, Mitsubishi shares rose by 326%, Mitsui by 279%, Itochu by 219%, Marubeni by 478% and Sumitomo by 227%.

Analysts whose recommendations are tracked by FactSet, on average, find Marubeni shares the most attractive of the five - with a consensus rating of Buy. Mitsui, Itochu and Sumitomo have Overweight ratings, which is also a Buy recommendation. Most analysts are neutral on Mitsubishi shares at current prices, advising not to buy, but not to sell them either.

This article was AI-translated and verified by a human editor