Buffett’s Berkshire lifts stakes in Japan trading houses, buoys shares

[TOKYO] Warren Buffett’s Berkshire Hathaway has raised its stakes in Mitsubishi and Mitsui & Co, according to the Japanese trading houses, prompting a jump in shares across the sector.

A unit of the American company increased its holding in Mitsubishi to 10.23 per cent on a voting rights basis, the Japanese firm said in a statement on Thursday (Aug 28), up from 9.74 per cent in March. Separately, Mitsui said Buffett’s group had also raised its stake in the trading house.

“We see this additional acquisition as a sign of the firm’s continued confidence and trust in our company, and we will further strengthen our business portfolio,” a Mitsui spokesperson said in an email. They added Berkshire’s holding has not exceeded 10 per cent on a voting rights basis. It held 9.82 per cent as of March, according to Bloomberg data.

Mitsubishi’s shares jumped as much as 2.9 per cent as the market reopened after midday break in Tokyo, the most in three weeks, while Mitsui rose as much as 1.8 per cent.

Buffett’s rising stakes are a vote of confidence for Japan’s trading houses, which have sharpened focus on shareholder returns to become an attractive long-term bet for global investors in a time of heightened geopolitical uncertainty.

His company has holdings in five of Japan’s biggest trading firms, including Marubeni, Itochu and Sumitomo, which were first revealed in 2020. The Japanese companies have a sprawling business portfolio, ranging from overseas oil and gas production to salmon farming and convenience stores.

“Berkshire’s continued ownership has brought renewed attention” to Japan’s shoshas as the trading houses are known, said Norikazu Shimizu, an analyst at Iwai Cosmo Securities. They are becoming “more proactive” at ramping up shareholder returns through things like share buybacks, he added.

The American company had originally planned to keep its stakes below 10 per cent, but the Japanese firms have agreed to relax the ceiling “moderately,” according to Buffett’s annual investor letter from February.

Filings on the Federal Energy Regulatory Commission’s website show that Berkshire Hathaway had applied for approval to purchase additional stakes in the Japanese trading firms earlier in May. The FERC authorised the transactions earlier this month, according to the filings.

A spokesperson for Itochu said that while the company has not confirmed additional share purchases, “we understand that with a time lag, the shareholding ratios will end up being aligned with others at 10 per cent level.” A spokesperson for Sumitomo said the company had not confirmed if Berkshire Hathaway’s holding had exceeded 10 per cent. A spokesperson for Marubeni declined to comment. BLOOMBERG