Buffett's Big Japan Bet: Berkshire Hathaway Boosts Stakes in Trading Houses to Nearly 10%

Buffett's Growing Love Affair with Japan's Trading Giants

Warren Buffett, the legendary investor known for his value-oriented approach, has been steadily increasing Berkshire Hathaway's stakes in five major Japanese trading houses. This strategic move, which began in 2019, has now reached a significant milestone with Berkshire's ownership approaching the 10% threshold in each company.

According to regulatory filings released in March 2025, Berkshire has increased its stake in Mitsui & Co to 9.82% from 8.09%, while also boosting its holdings in Mitsubishi Corp to 9.67%, Sumitomo Corp to 9.29%, Marubeni to 9.3%, and Itochu to 8.53%. These increases follow Buffett's announcement in his annual shareholder letter that the five trading houses had agreed to moderately relax the previous 10% ownership cap, allowing Berkshire to gradually expand its position.

The total value of Berkshire's investments in these Japanese firms reached approximately $23.5 billion by the end of 2024, representing one of the company's most significant international positions. Berkshire initially spent $13.8 billion acquiring these stakes and expects to receive about $812 million in dividend income in 2025 from these investments.

Understanding the 'Sogo Shosha' Business Model

The five companies-Mitsui, Mitsubishi, Sumitomo, Itochu, and Marubeni-are known in Japan as 'sogo shosha' or general trading companies. These unique business entities play a crucial role in the Japanese and global economy, acting as intermediaries in various sectors while providing logistical support.

Sogo shosha trade in a wide variety of materials, products, and food, but their business model extends far beyond simple trading. They are deeply involved in the real economy across sectors like commodities, shipping, energy, and steel production. Their diversified business portfolios and global reach make them somewhat similar to Berkshire Hathaway itself-a comparison Buffett has explicitly made.

In a 2023 interview with Nikkei, Buffett noted that these trading houses are very much akin to Berkshire, highlighting their diversified nature and investment approach. This similarity likely contributed to Buffett's comfort with these investments, despite his general tendency to avoid businesses he doesn't fully understand.

The trading houses have consistently demonstrated strong financial performance, with regular dividend increases and prudent capital allocation strategies that align well with Berkshire's own investment philosophy.

The Strategic Timing of Buffett's Japan Play

Buffett's initial investment in these trading houses in 2019 was perfectly timed. He was attracted by their solid financials compared to what he considered undervalued stock prices. When Berkshire first revealed its 5% ownership stakes on Buffett's 90th birthday in August 2020, many market observers were surprised by this significant move into the Japanese market.

The timing proved advantageous as these five trading companies have outperformed the broader Nikkei 225 index over the past five years. While the Nikkei has experienced volatility, including a 6% decline earlier this year, the trading houses have generally shown more stability and consistent returns.

Berkshire's approach to these investments has been methodical and patient. After spending about a year acquiring the initial positions, Buffett and his team took time to better understand the companies and their management. As they became more familiar with the operations and leadership of these firms, their confidence in the investments grew stronger.

The recent increase in stakes comes at an interesting time in the global economy, with Japan's inflation currently above 3% and the Bank of Japan considering rate hikes while other central banks contemplate cuts. However, Buffett has made it clear that these macroeconomic factors don't influence his long-term view on these investments.

A Forever Investment: Buffett's 50-Year Vision

Perhaps the most striking aspect of Berkshire's Japanese investments is the extraordinary time horizon Buffett has articulated. During Berkshire's annual shareholder meeting in May 2025, Buffett made a remarkable statement about these holdings: In the next 50 years, we won't give a thought to selling those positions.

This declaration underscores not only Buffett's confidence in these companies but also his commitment to truly long-term investing-a principle he has advocated throughout his career. At 94 years old, Buffett is clearly thinking well beyond his own lifetime, setting up these investments as cornerstone holdings for Berkshire's future.

Greg Abel, Berkshire's Vice Chairman and Buffett's designated successor as CEO, has echoed this sentiment, expressing his vision of holding these investments for 50 years or forever. We're building relationships, Abel stated during the shareholder meeting, and we really want to do big things with them globally.

This multigenerational approach to investing sets Berkshire apart from most institutional investors and highlights the company's unique position in the market. By establishing these relationships with the intention of maintaining them for decades, Berkshire is positioning itself as a stable, supportive shareholder that can help these companies execute their long-term strategies without the pressure of quarterly performance demands.

Currency Strategy and Financial Engineering

Berkshire's Japanese investments involve not just equity stakes but also a sophisticated currency strategy. The company has issued yen-denominated bonds to finance part of these investments, effectively creating a natural hedge against currency fluctuations.

In October 2024, Berkshire completed a $1.9 billion yen bond sale, which now appears to have been preparation for this latest round of buying. By borrowing in yen to purchase yen-denominated assets, Berkshire reduces its exposure to exchange rate volatility between the dollar and yen.

Buffett has clarified that Berkshire aims for currency neutrality and holds no specific outlook on future currency movements. This approach aligns with his general philosophy of focusing on business fundamentals rather than trying to predict macroeconomic trends or currency movements.

The strategy has already shown some benefits, with Berkshire reporting $1.15 billion in foreign currency gains after taxes for 2024. However, Buffett has emphasized that these currency considerations, while important, were secondary to the fundamental business case for investing in the trading houses.

Implications for Japanese Markets and Global Investors

Buffett's substantial and growing investment in Japanese trading houses sends a powerful signal to global investors about the potential value in the Japanese market. Often referred to as the Oracle of Omaha, Buffett's investment decisions are closely watched and frequently emulated by investors worldwide.

When Berkshire first announced its Japanese investments in 2020, and again when it increased its stakes in 2023, the news sent ripples through the Nikkei index. While the current market backdrop appears more challenging, with global investors wrestling with uncertainties from trade tariffs to economic slowdowns, Buffett's continued accumulation signals his view that long-term value exists in these companies.

The trading houses themselves have welcomed Berkshire's growing stake, with Mitsubishi and Itochu explicitly stating that they view it as a signal of long-term confidence in their businesses. This positive reception suggests the potential for productive collaboration between Berkshire and these firms in the future.

For global investors, Buffett's Japan play offers several lessons: the importance of looking beyond domestic markets, the value of patience in building positions, and the benefits of focusing on business fundamentals rather than short-term market movements or macroeconomic predictions.

What's Next for Berkshire's Japan Strategy?

As Berkshire's stakes in the Japanese trading houses approach 10%, investors are naturally wondering how much further Buffett plans to go. In his annual letter to shareholders, he indicated that Berkshire's ownership of all five companies would likely increase somewhat over time, but he hasn't specified an ultimate target percentage.

Given the recent relaxation of the previous 10% ownership cap, Berkshire now has the flexibility to continue increasing its stakes. However, Buffett's approach has always been measured and respectful of the companies in which he invests, suggesting that any further increases will likely be gradual and done in close consultation with the management of these firms.

Beyond simply increasing its ownership percentages, Berkshire may also look for additional ways to collaborate with these trading houses. Buffett has mentioned that he expects Berkshire will find other ways to work productively with the five companies, though he hasn't elaborated on what form these collaborations might take.

With Berkshire holding over $330 billion in cash and cash equivalents at the end of 2024-about twice its cash holdings from the previous year-the company certainly has the financial capacity to substantially increase its Japanese investments if attractive opportunities arise. However, Buffett's disciplined approach to capital allocation suggests he'll only deploy this cash if he continues to see compelling value.