Buffett's Appetite for Japanese Trading Houses Instils Confidence, Sends Stocks Soaring
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Warren Buffett's expressed intention to increase his stake in Japan's top five trading houses has sent their stock prices surging, Nikkei Asia reports. The billionaire investor's comments, outlined in his annual letter to Berkshire Hathaway shareholders, come as the companies agreed to raise the threshold for foreign ownership, paving the way for further investment.
Buffett, in his letter, indicated his intention to increase Berkshire's holdings in Itochu, Mitsubishi Corp., Mitsui & Co., Sumitomo, and Marubeni. He noted that as Berkshire neared the previous 10% ownership limit in each company, the trading houses agreed to adjust the ceiling, allowing for greater investment.
"Our holdings of the five are for the very long term, and we are committed to supporting their boards of directors," Buffett wrote.
Mitsubishi Corp., in response to Nikkei Asia's inquiries, welcomed Buffett's potential increased investment, highlighting Berkshire's support for the company's growth and value creation. The Japanese company emphasized the positive impact of having reliable shareholders and its ongoing discussions with Berkshire to explore potential collaborations, including joint investments.
"We do not rule out exploring future possibilities if there are opportunities that could lead to mutual benefits," Mitsubishi stated.
The news of Buffett's potential increased investment has visibly boosted confidence in the Japanese trading houses. At the Tokyo Stock Exchange, shares of all five companies saw significant gains, ranging from 4.4% to 9.0%, defying the overall downward trend in the Nikkei average.
Berkshire Hathaway initially disclosed a 5% stake in each of the five trading houses in August 2020. As of the end of last year, these combined holdings were valued at $23.5 billion. Buffett's commitment to a long-term investment strategy, coupled with the increased ownership ceiling, has created a favorable environment for further investment and potential collaborations.