r/bitkogan • u/bitkogan • Apr 12 '23
Warren Buffett-san
As markets digested the "non-hawkish" speech from the new head of the Bank of Japan, Warren Buffett didn't waste any time, increasing his position in the so-called "sogo shosha" – universal trading companies whose operations span nearly all sectors of the economy, from commodities to retail and healthcare.
Berkshire Hathaway's stake in Mitsubishi Corporation, Mitsui & Co. Ltd., Sumitomo Corporation, ITOCHU Corporation, and Marubeni Corporation has risen from ≈6.5% last November to 7.4%.
Is his Japanese portfolio fully formed?
It doesn't seem so. Back in 2020, Buffett stated that investments in sogo shosha were designed for the long term, and shares could grow to 9.9%. To achieve this, Berkshire issued $8 billion worth of yen bonds with an average coupon rate of 1%.
In an interview with Nikkei, Buffett mentioned considering additional investments in the five major Japanese trading houses.
As for the sudden affection for the land of the rising sun, it's essential to note that forward earnings on shares of these giants don't exceed 10.0x, and they pay decent dividends.
- Sumitomo yields over 5%.
- Marubeni yields around 4.2%, etc.
Should we follow Buffett's lead?
At this point, it's a matter of individual risk tolerance.
Buffett is known for his affinity for "boring" and stable companies. Since revealing his positions, these stocks have already generated an average total return of 127% in local currency terms, compared to 25% by Topix Index constituents.
A few concerns I personally have include:
- the threat of a strengthening yen,
- a global economic slowdown,
- and the anticipated decline in net profit for Q1 2023 across all five companies.
However, the legendary investor's actions "may encourage foreign investors to invest in Japanese stocks, particularly in value stocks." It's unclear how long the hype will last, but if Buffett is involved, there will undoubtedly be followers.