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How Buffett’s Japan trading house bid paid off

Photo: Getty

Few could understand the reasoning when Berkshire Hathaway bought into Japan’s five creaking, antiquated trading houses in 2020. But a spate of record results has vindicated Warren Buffett’s decision.

For the older among us there’s something pleasing about watching dinosaurs thrive as the bright young things struggle.

So there were a few smiles when, amid market turmoil that hammered the Zuckerbergs and Musks of this world, 91-year-old Warren Buffett was shown to be prescient for Berkshire Hathaway’s much-derided purchase of stakes in Japan’s trading houses.

Berkshire Hathaway (BH) bought just over 5% apiece of Mitsubishi Corp, Itochu, Marubeni, Sumitomo and Mitsui, with the potential to climb to 9.9%. The five trading houses, or sogo shosha, are throwbacks. They are wildly diversified in an age when focus is much preferred. They are filled with old-economy businesses that date back to the 19th century and with a troubling reliance on fossil fuels.

When BH spent over $6 billion in building the stakes, announced in August 2020, they seemed curious picks, even absurd. But through February 2022, the five houses announced a string of record-breaking numbers for the first nine months of the Japanese financial year, in most cases earning more profit in those three quarters than they had ever done before in a full year.


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Chris Wright head.jpg
Asia editor Euromoney
Chris Wright is Asia editor. He covers the Asia Pacific region and is based in Singapore. He has previously been Middle East editor of Euromoney, editor of Asiamoney, investment editor of the Australian Financial Review and a correspondent on emerging markets and sovereign wealth for numerous publications worldwide. He has also written two books.