Wealth Strategies

Buffett Takes Long-Term Japanese Bet

Tom Burroughes, Group Editor, September 1, 2020

articleimage

The investment figure's actions and comments are staples of wealth management conversations. His latest move suggests that Buffett wants to spread his portfolio exposure outside the US.

Berkshire Hathaway, the business of investment tycoon Warren Buffett, has purchased a 5 per cent stake in each of Japan’s five biggest trading houses, together worth over $6 billion.

The long-term investments are in Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co Ltd and Sumitomo Corp, Berkshire said in a statement yesterday. The percentage stakes could rise to a cap of 9.9 per cent.

A move to cut exposure to the domestic US economy amidst uncertain times, it will stir interest in the wealth management industry. The actions and comments of Buffett, just turned 90, have been a staple of investment industry conversations for years. For example, his annual letter to shareholders is routinely parsed for ideas.

The acquisitions were conducted via Berkshire Hathaway’s wholly-owned subsidiary, National Indemnity Company. The holdings were acquired over a period of about 12 months through regular purchases on the Tokyo Stock Exchange, Berkshire Hathaway said. 

The group said it has already chalked up a long history of “substantial, passive holdings in successful businesses”, giving cases such as Coca-Cola, American Express and Moody’s.

Buffett said the firm will not buy stakes that take holdings of any of the five firms above the 9.9 per cent mark.

Exposure from the investment stakes to the dollar-yen exchange rate is small, Berkshire Hathaway said, because it has Y625.5 billion of yen-denominated bonds outstanding, maturing at various dates beginning in 2023 and ending in 2060. As a result, exposure to exchange rate fluctuations is “minor."

Register for FamilyWealthReport today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes