(Bloomberg) — Berkshire Hathaway Inc. is looking to increase ownership in Japan’s five largest trading houses “over time,” Warren Buffett said in an annual letter to shareholders that is likely to support their share prices in Tokyo.
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The Omaha, Nebraska-based conglomerate had originally agreed to keep its holdings in the companies below 10%. But the trading houses have agreed to relax the ceiling “moderately” as Berkshire approaches the limit, according to the letter dated Saturday.
The shares of the five — Mitsubishi Corp., Mitsui & Co., Itochu Corp., Sumitomo Corp. and Marubeni Corp. — have benefited over the longer-term from Buffett’s interest. But they have struggled in recent months, along with the wider Japanese equities market.
The positive comments from the veteran investor will be in focus for traders when the Japanese market reopens on Tuesday following a public holiday. Tokyo stocks have been lagging global peers as the stronger yen has weighed on exporters. The Topix is down about 1.7% this year while the MSCI Asia Pacific index is up about 4.6%.
Investors have been speculating over Buffett’s next move since Berkshire Hathaway in October sold its biggest-ever yen bond since 2019.
Buffett praised the trading houses for increasing dividends when appropriate, conducting share buybacks when it is “sensible to do so,” and for being less aggressive in their executive pay than US counterparts.
Berkshire said it will hold its Japanese position for “many decades” and is looking for other ways to cooperate with the companies in the future.
Mitsubishi Corp. is in discussion with Berkshire on cooperating on individual projects, including through joint investments, the Tokyo-based trading house said on Sunday. The company will continue to make an effort to improve corporate value and raise its share price in the medium to long-term, it added.
–With assistance from Koh Yoshida.
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