The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookiesbefore using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

How Buffett’s Japan trading house bid paid off

Warren-Buffett-seated-Getty-960.jpg
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.

A

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

Tags

Chris Wright head.jpg
Asia editor Euromoney
Contact
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.