Berkshire Hathaway Inc is looking to increase ownership in Japan’s five largest trading houses “over time,” company chairman and CEO Warren Buffett said in an annual letter to shareholders.
The conglomerate had originally agreed to keep its holdings in the companies below 10 percent. However, the trading houses have agreed to relax the ceiling “moderately,” as Berkshire approaches the limit, a letter dated on Saturday said.
The shares of the five — Mitsubishi Corp, Mitsui & Co, Itochu Corp, Sumitomo Corp and Marubeni Corp — have benefited over the longer-term from Buffett’s interest. However, they have struggled in recent months, along with the wider Japanese equities market.
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Investors have been speculating over Buffett’s next move since Berkshire Hathaway in October last year sold its biggest-ever yen bond since 2019.
Buffett praised the trading houses for increasing dividends when appropriate, conducting share buybacks when it is “sensible to do so” and for being less aggressive in their executive pay than US counterparts.
Berkshire said it would hold its Japanese position for “many decades” and is looking for other ways to cooperate with the companies in the future.
Mitsubishi Corp is in discussion with Berkshire on cooperating on individual projects, including through joint investments, the Tokyo-based trading house said on yesterday.
The company would continue to make an effort to improve corporate value and raise its share price in the medium to long-term, it added.
Berkshire Hathaway’s operating earnings surged 71 percent in the fourth quarter, as higher interest rates lifted the conglomerate’s investment income and its insurance business improved.
Operating earnings were US$14.5 billion in the three months through December last year, the conglomerate said on Saturday.
The increase was driven in part by a 48 percent jump in insurance investment income to US$4.1 billion, amid higher interest rates.
Earnings also got a significant boost from a strong recovery in the firm’s insurance underwriting business, with operating earnings quadrupling over the period to US$3.4 billion.
In his annual letter to shareholders, Buffett reminded investors that the great majority of the firm’s money remains invested in equities, public and private, and that would not change.
Berkshire’s market capitalization has been hovering above US$1 trillion since late last month.
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