Billionaire investor Warren Buffett’s Berkshire Hathaway yesterday said it has taken stakes of just over 5 percent in five major Japanese trading houses in what it says is a long-term investment.
Share prices of the five huge companies surged between 4percent to 9.5 percent in Tokyo after the company announced the investment.
Berkshire Hathaway said that its subsidiary National Indemnity Co planned to notify regulators of the purchases that had been made over the past year.
Photo: AP
The companies are Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co and Sumitomo Corp.
The stakes are valued at more than US$6 billion according to Bloomberg News, and were acquired over approximately a year through regular purchases on the Tokyo Stock Exchange, Berkshire said.
It said it might increase the stakes to up to 9.9 percent in any of the companies, but added it would not exceed that cap “unless given specific approval by the investee’s board of directors.”
It described them as “passive investments,” noting that the company has held similar holdings in Coca-Cola for 32 years; American Express for 29 years and credit ratings agency Moody’s for 20 years.
The powerful trading houses are some of Japan’s oldest and biggest companies and the anchors of vast industrial groups called keiretsu.
Although the Japanese economy has been growing slowly for most of the past two decades and has been in recession since late last year, major companies have invested on a global scale and are cash rich.
They are also viewed as relatively undervalued, with price to earnings ratios, in most cases, well below the average for markets in the US and Japan.
In the statement, Buffett said he was “delighted” to participate in the Japanese firms and he hoped there would be “opportunities of mutual benefit.”
Additional reporting by AFP
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