Buffett supports Japanese trading companies in a letter and boosts stock prices
Warren Buffett's favorite Japanese trading company rose after Buffett stated in a letter to investors that they had “superior” shareholder preferential policies than the US.
$Marubeni(8002.JP$It is the highest increase in the past 4 months, and rose 5.6% on Monday. Four other trading companies (Mitsubishi Corporation, ITOCHU Corporation, Mitsui & Sumitomo Corporation) owned by Berkshire Hathaway also rose and surpassed the overall market.
“Mr. Buffett spent a lot of space talking about Japanese trading companies in his letter. Then, I spent about 1 page of the 16-page annual letter addressed to shareholders and talked about Japanese companies.
Mr. Buffett said that Japanese companies are still undervalued, and since there is still room until they reach the upper limit of 9.9% investment ratio announced by Berkshire, there is a high possibility that the investment ratio will be raised, and Mr. Mito, who has attended the general meeting of shareholders of US insurance companies since 2014.
After the Nikkei Stock Average hit an all-time high last week, depreciation of yen, global high-tech stock appreciation, and improvements in shareholder returns became tailwinds. The fact that Mr. Buffett once again supported the Nikkei Stock Average last year also boosted the confidence of the entire market.
Japanese trading companies have hit record highs since Mr. Buffett stated in April that they would raise their shareholding ratio. It is the largest trading company in Japan $Mitsubishi(8058.JP$It's been about 111% in the past year, $Mitsui(8031.JP$It has soared more than 70%.
Buffett said there could be no “spectacular” performance with the highest cash ever.
In its financial results announcement, Berkshire stated that unrealized gains at the end of the year at the five largest trading companies in Japan were 8 billion dollars. Currently, Berkshire holds approximately 9% of each of the five trading companies, and the total amount is said to amount to 1.6 trillion yen.
According to Buffett's letter to stakeholders, the five trading companies reduced the number of issued shares at “attractive” prices.
Also, the letter stated that the management teams of each company are “far less aggressive” with respect to remuneration compared to the United States. Each company dividends only about one-third of its profits, and it is said that most of the remainder is used for business construction and stock buybacks. Berkshire once again emphasized the possibility of partnering with these companies in the future.
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