Why Buffett Is Betting Big On Japan

Why Buffett Is Betting Big On Japan
Stéphane Renevier, CFA

7 months ago1 min

Japan’s stocks have been making a comeback – and it’s been fierce. Thanks to alluring valuations, a robust growth spurt, and a more conducive business environment, these shares have been shaking off a thick layer of cobwebs. And the oracle of Omaha, good old Warren Buffett himself, is reaping the benefits.

Way back in 2020, Buffett started sinking his teeth into the five bigwigs of Japanese trading houses. These huge conglomerates, known as sōgō shōsha, are the veins pumping life into Japan’s economy. They’ve got deep roots in Japan’s economy and history, and provide an array of commodities – food, textiles, machinery, and, most significantly, energy and metals.

And after holding a tête-à-tête with these companies last month (on a trip to Japan with his likely Berkshire Hathaway successor) he revealed that he had upped his stake, making it his largest investment outside of the US and Europe. And he also indicated he might still have an appetite for more.

It makes sense: these companies tick all the boxes on Buffett’s investment checklist: they're high-quality, profitable businesses protected by high entry barriers; they're well-managed; they shell out handsome dividends; and their stocks trade at attractive prices. As you can see from the chart, these companies look pretty appealing relative to US stocks.

But before you decide to blindly do as the oracle does, it’s important that you remember that Buffett sees investing as a marathon, not a sprint. (His preferred holding period, he’s often said, is “forever”.). As the man himself has cautioned, his investment isn’t trying to predict the trajectory of Japanese stocks over just the next year. That being said, if you're a patient value investor looking to sprinkle some global flavor into your portfolio, these five companies could be worth a second glance.



All the daily investing news and insights you need in one subscription.

Learn More

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.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG