Berkshire Hathaway CEO Greg Abel stated that rising Japanese bond yields do not pose a significant challenge for the country's major trading houses, emphasizing that borrowing costs remain relatively modest. He explained that these companies, which include Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo, did not view the higher yields as a fundamental issue, and noted that Japanese yields, while at multi-decade highs, are still low compared to global standards. Berkshire Hathaway continues to see value in these investments and plans to raise debt in yen as appropriate.
Abel also detailed how Berkshire Hathaway increased its stake to over 10% in each of the five trading firms, having initially committed not to cross the double-digit threshold. He clarified that Berkshire obtained permission from each individual trading house to exceed the 10% ownership level six years after the initial investment. These long-term holdings, which have generated strong returns and substantial dividend income, are viewed by Berkshire as strategic investments to be held for many decades.
Since Berkshire's initial investment announcement in 2020, shares of these Japanese trading houses have significantly outperformed the Nikkei 225. Companies like Mitsubishi and Marubeni saw their stock prices rally, with Mitsubishi rising 9.2% and Marubeni jumping 8%. Analysts like Norikazu Shimizu of IwaiCosmo Securities Co. noted that these firms are trading at attractive valuations, and their diversified business models across various sectors like energy, metals, food, and industrial supply chains provide stability against market uncertainties and commodity price volatility. The total aggregate investment by Berkshire in these five companies has reached approximately $13.8 billion.
