Buffett's successor said he wants to expand Berkshire's Japanese holdings

During his first visit to Tokyo as CEO of Berkshire Hathaway, Greg Abel confirmed that he would continue the investment strategy in Japan initiated by Warren Buffett and indicated that it might be expanded. On September 3, shares of the country’s five largest diversified trading conglomerates rose: Mitsubishi gained as much as 4.8% during trading, while Sumitomo, Mitsui, Itochu, and Marubeni each rose more than 3%, according to Bloomberg.

Berkshire disclosed its investments in five Japanese trading houses in 2020. At that time, the investment firm’s stake in each of them was about 5%, and by 2026 it had exceeded 10%, Nikkei reports. “This is truly a long-term investment: we intend to hold these stakes for many decades,” Abel said on CNBC on September 2.

In an interview with Nikkei, he stated that Berkshire intends to increase its holdings in trading firms. “Our goal is to continue increasing our stakes,” Abel said, expressing confidence in their performance and growth prospects.

A new vote of confidence from Abel “could reignite interest” in trading house stocks, suggested Takuma Ikemoto, an analyst at Tokai Tokyo Intelligence Laboratory. According to FactSet data cited by The Wall Street Journal, analysts on average believe that the stocks of any of the five Japanese trading houses should outperform the market (consensus rating: Overweight).

Trading firms offer Berkshire new investment ideas, Abel said. “They look for companies we might buy. Thanks to them, we can consider a wide range of firms, since they often research companies that are smaller than those we’re usually interested in. “They know the management, so they can assess the quality of leadership and help determine whether it would be a good investment,” Abel explained in an interview with Nikkei.

At the same time, Berkshire’s interest in Japan is no longer limited to investments in trading houses. In March, the company announced the purchase of a 2.5% stake in the insurer Tokio Marine and stated its intention to collaborate with the company on international transactions. On September 3, Tokio Marine’s stock rose by more than 2%.

Abel did not rule out the possibility that Berkshire might buy other stocks. “We have many ideas of our own regarding [investment] opportunities that may exist here in Japan,” he told Nikkei. “We firmly believe that there are companies here with truly high-quality businesses that will remain stable and strong five to ten years from now. We are constantly evaluating and researching them.”

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