Warren Buffett increases his stake in five Japanese trading houses

(Bloomberg) – Berkshire Hathaway Inc. has increased its stake in five of Japan’s trading houses to an average of more than 8.5%, in a bid to double down on some of Warren Buffett’s favorite stocks.

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Berkshire has stakes in Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp., the U.S. insurer said in a statement Monday. Buffett, Berkshire’s chairman, said in April that the company would increase stakes in Japanese companies, pushing their stock prices to record highs.

Buffett traveled to Japan in April to meet with business executives for the first time in a whirlwind of meetings that both sides hailed as a success. The conglomerates, which do everything from gas trading to salmon farming, reported increased profits last year due to high commodity prices and a weak yen.

The billionaire investor’s endorsement, combined with signs of stable inflation and better shareholder returns, including buyouts, helped propel Japanese stocks to a 33-year high. The Topix wholesale trade index – which includes Mitsubishi and other peers – has climbed 39% this year, outpacing electrical appliance makers.

Mitsubishi and other Japan-based companies with exposure to commodities have used proceeds from last year’s energy price spike to carry out buyback programs.

The rise in shares of these companies and Japanese stocks as a whole could be limited from here, however, as the market has already priced in further buying by Buffett, according to Hiroshi Namioka, chief strategist at T&D Asset Management Co Ltd. .

Berkshire plans to increase investments up to 9.9% from each of the five Japanese companies. “The company will not make any purchases beyond this point unless specifically authorized by the issuing entity’s board of directors,” the statement said.

–With the help of Stephen Stapczynski.

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