Buffett's Berkshire Finds Value In Japan
When Warren Buffett speaks, I listen.Â
Mr. Buffett Buffett marked his 90th Birthday with the announcement of Berkshire Hathaway's acquisition of slightly more than 5% of the outstanding shares in five of the leading Japanese trading companies. The investment is worth a combined total of about $US6.7 billion based on the companies' share prices when the investment was announced.
Berkshire Hathaway has built passive stakes of just over 5% in each of Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo over the past 12 months.
Mr. Buffett himself said in the press release that he is "delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,"
Looking at these companies more closely, they seem like classic Buffett investments. 4/5 of them are profitable with a substantial amount of cash on hand, and also trade on a reasonable price to earnings multiples. That makes them an inexpensive and stable investment opportunity.
Buffett also looks to hold long-term passive stakes in profitable businesses, and this latest investment looks to be no different. Berkshire Hathaway intends to âhold its Japanese investments for the long termâ, with the opportunity to increase their stake in each of the companies.Â
You can read more about Berkshireâs latest Japanese investments here.
This isn't the only activity we've seen from Berkshire Hathaway over the last few months. The conglomerate recently announced that it had sold off nearly $AUD8.4 billion of its US bank holdings and invested $US500 million Barrick Gold shares (representing 0.3% of Berkshireâs huge $US200 billion-plus portfolio) in the three months to 30 June 2020.
Berkshire's investment in a gold miner is a strange one given Buffett himself has traditionally been against gold, preferring to invest in cash-producing asset classes like shares. But considering the position only makes up 0.3% of the portfolio, it's unlikely to move the needle too dramatically and is more of a hedge than anything.Â