Warren Buffett’s Berkshire Hathaway has acquired a
slightly more than 5% stake in each of the five leading
Japanese trading companies. CNBC’s “Squawk Box” crew
discusses. For access to live and exclusive video from
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Warren Buffett’s case, it may be true.
The chairman and CEO of Berkshire Hathaway
announced Sunday — his 90th birthday — that his
company has acquired a slightly more than 5% stake
in each of the five leading Japanese trading companies.
The companies are Itochu Corp., Marubeni Corp.,
Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp.
Berkshire said it acquired the holdings over a roughly
12-month period through regular purchases on the Tokyo
Stock Exchange.
Based on Friday’s closing prices for the trading houses,
a 5% stake in each would be valued at roughly $6.25 billion.
The Japanese trading companies — known as sogo shosha
— are conglomerates that import everything from energy
and metals to food and textiles into resource-scarce Japan.
They also provide services to manufacturers. The trading
houses have helped grow the Japanese economy and
contributed to the globalization of its business.
But as they have extended their footprint overseas,
they’ve also become more vulnerable to global predicaments,
like the financial crisis from a decade ago.
The trading houses also face increasing competition
from venture capitalists and private equity funds.
For Buffett, the move is no quick trading play.
Berkshire says it intends to hold the investments for
the long term, and that it may increase its holdings
in any of the companies up to a maximum of 9.9%,
depending on price. Berkshire also pledged to make no
purchases beyond a 9.9% stake in any of the companies
unless given approval by the trading companies’ boards
of directors.
In describing its intentions for the investment in the
trading houses, Berkshire pointed to its history of
long-term,
passive holdings in companies like Coca-Cola Co.,
American Express Co., and Moody’s Corp.,
which each span multiple decades.
“I am delighted to have Berkshire Hathaway participate
in the future of Japan and the five companies we have
chosen for investment,” said Buffett, adding that the
trading houses have many joint ventures around the
globe.
“I hope that in the future there may be opportunities
of mutual benefit.
” Berkshire also said that despite its large, yen-denominated
bet, it would have little exposure to currency fluctuations
because it holds 625.5 billion of yen-denominated bonds
($5.93 billion) that will mature at various dates from
2023 through 2060.
