The Oracle Of Osaka

The Oracle Of Osaka
Daniel Johnston

11 months ago2 mins

Mentioned in story

What’s Going On Here?

Warren Buffett’s Berkshire Hathaway could be poised to up its stake in Japanese firms.

What Does It Mean?

Japan's trading houses play a vital role in the Land of the Rising Sun, especially given the country's limited natural resources. The jack of all trades import everything from food to energy, and they’ve been pivotal in expanding and globalizing Japan's economy. They’ve also caught Buffett’s eye: when the pandemic hit back in 2020, he spotted an opportunity and poured $6 billion into them – and that bet, which the firm topped up late last year, has netted Berkshire Hathaway a cool $4.5 billion in gains. No surprise, then, that Buffett’s flirting with the idea of increasing Berkshire's 7.4% stake in the trading houses. There are also some new stock investments on the table: Buffett's even trekked out to Japan, where he’s currently catching up with key business leaders.

Why Should I Care?

For markets: Buffett’s blessing.

Buffett's track record is a testament to his first-class business acumen, and his interest in Japan suggests there could be some more golden nuggets waiting to be discovered. Plus, Berkshire kicked off a yen-denominated bond sale this week, signaling that the firm could be getting ready to splash the cash in Japan pronto. If you fancy trying to get ahead of those moves, keep Buffett’s preferences in mind: well-managed companies, with strong competitive advantages, that look undervalued. But finding them is easier said than done…

The bigger picture: Just what Japan needed.

Buffett's Japanese dalliance is good news for the country's markets, and the all-important Nikkei 225 index took a leap when the news broke. That’s no wonder: Buffett’s stellar credentials might tempt foreign investors to waltz back into a market that’s witnessed more foreign selling than buying of late. Any newfound interest in Japanese stocks could ignite a spark of domestic optimism too – fueling spending and giving the economy a much-needed boost.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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