Berkshire Hathaway Purchases Stakes in Japanese Investment Companies

Berkshire Hathaway Purchases Stakes in Japanese Investment Companies

Berkshire Hathaway Inc., the flagship company of Warren Buffet, has picked up over a 5% stake in five Japanese companies that have substantial investments in the energy sector. Just before the Tokyo stock markets opened, it was revealed by Berkshire that investments had been made in Mitsubishi Corp, Mitsui & Co., Sumitomo Corp, Itochu Corp, and Marubeni Corp.

The effect on their stocks has been expectedly positive. Prices of shares of these five companies have surged by over 5 to 10 percent, powering the overall Nikkei Stock index up by 2% in intraday trading on Monday. Berkshire has declined to comment on the quantum of total investments made. However, if the share prices as of Friday closing is to be taken into account for calculations, the total amount could well be in the region of $6.25 billion.

An evaluation of the companies shows exciting facets. All five are trading companies, but describing them as investment engines would be more in order. They hold stakes in various sectors and industries, ranging from energy to mining to retail. Mitsubishi and Itochu have considerable stakes in retail and each runs a convenience store chain in Japan.

Traditionally, Japanese trading companies, including the ones under the focus today, are corporations that are mainly into the import of metals and energy, textiles, food, and everything else that resource-scarce Japan always needs. These companies are the foundation of the Japanese economy and have been mostly responsible for Japan becoming a global power after the devastation of World War II.

As they expanded globally, they also became susceptible to the volatility of global economic up and downswings. The trading houses also face competition from private equity funds and venture capitalists.

Commenting on the investment in the five companies, Buffet said,

Buffet said

The stakes bought in the companies by Berkshire have not been done overnight. They have been acquired over a year through regularly purchasing stocks on the Tokyo Stock Exchange.

As has always been the investment vision of Warren Buffet, Berkshire intends to hold the investments for the long-term and might even add to the present investments made, subject to the total stake not exceeding 9.9% subject to a favorable share price.

Thomas Byrd

Thomas Byrd

Thomas Byrd has worked as a freelance writer for some digital local publications. Recently he has joined FinanceStead as a chief news editor. He regularly contributes in weekly analysis of articles about market. In his free time, he likes to travel a lot and try different foods.

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