Japan’s trading houses surge as Buffett's Berkshire looks to boost stakes

Warren Buffett Photographer: Houston Cofield/Bloomberg

Japanese trading houses, including Mitsubishi Corp. and Marubeni Corp., rallied on Tuesday after Berkshire Hathaway Inc. said it was looking to increase ownership in the companies.

Mitsubishi rose as much as 7.1%, while Marubeni added more than 4% as of 9:12 a.m. Tokyo time. Mitsui & Co., Itochu Corp. and Sumitomo Corp. also gained.

Warren Buffett’s conglomerate said in 2020 that it had invested in Japan’s five largest trading houses. Berkshire originally agreed to keep its holdings at the companies below 10%, but the trading houses have agreed to relax the ceiling “moderately,” Buffett said in a letter dated Feb. 22.

The trading houses are involved in a wide range of businesses — from overseas oil and gas production to salmon farming and TV shopping — and have outpaced the Nikkei 225 since Buffett’s investment was announced. While the companies have benefited from a surge in commodity prices from 2022, their diversity in other segments helps them weather price volatility.

Buffett praised the trading firms 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.

“Over time, you will likely see Berkshire’s ownership of all five increase somewhat,” Buffett said. “Our holdings of the five are for the very long term, and we are committed to supporting their boards of directors.”

Mitsubishi is in discussion with Berkshire on cooperating on individual projects, including through joint investments, the Tokyo-based trading house said on Sunday.