SMM: Buffett celebrated his 90th birthday on Sunday, the same day Buffett's Berkshire Hathaway announced that it had acquired more than 5 per cent of each of Japan's five largest trading companies. These companies are Itochu, Marubeni, Mitsubishi and Mitsui and Sumitomo.
According to documents submitted by wholly-owned subsidiary National Indemnity Company, Berkshire Hathaway's specific shareholdings are as follows:
Itochu 5.0%, Marubeni 5.1%, Mitsubishi 5.0%, Mitsui 5.0%, Sumitomo 5.0%.
Berkshire Hathaway said it bought the shares regularly on the Tokyo Stock Exchange for about 12 months. The 5 per cent stake is worth about $6.25 billion, according to the trading companies' closing prices on Friday.
For this acquisition, Buffett himself said:
"I am pleased that Berkshire Hathaway is involved in the future of Japan and the five companies we have chosen to invest in, which have many joint ventures around the world. I hope there may be opportunities for mutual benefit in the future. "
Japanese trading companies, also known as integrated trading houses, are mainly responsible for the import of various commodities such as energy, metals, food and textiles in Japan. At the same time, they also provide services to manufacturers. These trading firms have helped Japan's economic growth and promoted the globalization of Japanese business.
But as their footprint expands overseas, they also become more vulnerable to global crises, such as the financial crisis a decade ago. These companies also face increasing competition from venture capitalists and private equity funds.
But these risks did not "dissuade" Buffett, and his latest move was not on a whim. Buffett said he intends to hold these investments for a long time and may increase his holdings in any of these companies, up to 9.9%, depending on the price.
Buffett also promised not to buy more than 9.9% of the companies unless approved by the boards of directors of the five companies.
In describing his investment intentions in these integrated trading houses, Buffett mentioned his long habit of passively holding shares in giant companies, including Coca-Cola, American Express and Moody's, all of which have held shares for decades.
Analysts point out that investing in Japan will help Buffett reduce the dependence of his business groups on the US economy. In the second quarter of this year, US economic growth experienced its worst contraction in at least 73 years as a result of the novel coronavirus epidemic.
In addition, increased investment in Japan will also help Buffett reduce Berkshire Hathaway's cash reserves. At the end of June, the company's cash reserves reached a record $146.6 billion.
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