Berkshire Hathaway Inc. (BRK) has purchased 5% stake in each of Japan’s five biggest trading companies. Cumulatively this investment cost $6 billion, the information was revealed by the company’s founder and Chairman Warren Buffett during his 90th birthday.
“The five major trading companies have many joint ventures throughout the world and are likely to have more. I hope that in the future there may be opportunities of mutual benefit,” said Buffett.
The companies include; Marubeni Corp. (T: 8002), Sumitomo Corp. (T: 8053), Mitsubishi Corp. (T: 8058), Itochu Corp. (T: 8001) and Mitsui & Co Ltd. (T: 8031). Buffett said the investment is a long term one and it has a possibility of increasing up 9.9% in each firm.
This choice has caught many unaware as investors tend to shy away from trading houses as their first option. The investment is however a game changer for Berkshire which is now shifting its investment base from the United States.
“Their cheap valuation may have been an attraction. But it is un-Buffett-like to buy into all five companies rather than selecting a few,” said Norihiro Fujito chief investment analyst at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.
Berkshire owns stake in more than 90 business entities based in the United States. Experts are viewing this new line of investment by the company as a mechanism the company has adopted to try and diversify.
“Buffett’s portfolio is becoming heavily skewed to Apple, so maybe he was looking for something the complete opposite of Apple,” said Hiroki Takashi, a Tokyo based senior analyst.