Berkshire Hathaway’s Japan investments represent one of its most successful international bets under Warren Buffett (and now continued under Greg Abel). The portfolio is concentrated in five major Japanese trading houses (sogo shosha) plus a growing position in insurance.
1. Core Holdings : The Five Trading Houses
Berkshire has
steadily increased ownership in :
- Itochu Corp.
- Marubeni Corp.
- Mitsubishi Corp.
- Mitsui & Co.
- Sumitomo Corp.
Key Metrics (approximate, based on latest available filings) :
- Ownership :
All five stakes now exceed 10%
(some crossed this threshold in 2026). Earlier levels were around 7–9%.
- Total Cost Basis :
~$15.4 billion (end of 2025 figures; additional purchases since).
- Current Market Value : Roughly $35–38 billion (significant appreciation from initial ~$6.5
billion in 2020).
- Unrealized Gains :
Approximately $24 billion
(a ~2.5x+ return on invested capital in ~6 years).
These companies
are massive, diversified conglomerates with global operations in commodities,
energy, metals, food, logistics, machinery, and real estate. They generate
strong cash flows, pay reliable dividends, and have benefited from Japan’s
economic reflation and global trade dynamics.
2. Additional Japan Exposure
- Tokio Marine Holdings : Berkshire announced a significant
investment (~$1.8 billion) in Japan’s largest property & casualty
insurer. This extends the bet beyond trading houses into
financials/insurance, aligning with Berkshire’s core expertise.
3. Financing Strategy
Berkshire funded
much of this with yen-denominated bonds
issued at very low rates (often <1–2%). This provides:
- Natural
currency hedge.
- Positive
carry (dividends ~4% vs. low borrowing costs).
- Accounting
gains from yen movements.
Berkshire is one
of the largest foreign issuers of yen debt and continues refinancing/issuing
new bonds.
4. Performance & Strategic Rationale
- Strong Returns :
The holdings have significantly outperformed since 2020, driven by
Japanese stock market rallies (Nikkei strength), corporate governance
improvements, share buybacks by the trading houses, and higher commodity
prices.
- Valuation :
Japanese stocks remain cheaper than U.S. peers on metrics like P/E,
offering a margin of safety.
- Diversification :
Reduces reliance on U.S. markets; Japan is now one of Berkshire’s largest
equity exposures outside the U.S.
- Long-term Commitment : Buffett repeatedly signaled openness to
increasing stakes up to 9.9% (and they have gone beyond in some cases with
approvals). The positions are viewed as permanent holdings.
5. Risks and Considerations
- Currency Risk :
While largely hedged via yen debt, residual exposure to USD/JPY
fluctuations remains.
- Japan-Specific Risks : Economic slowdown, geopolitical
tensions (China/Taiwan), or policy reversals.
- Concentration :
Five similar companies + insurer means sector/geographic concentration.
- Market Volatility :
Bond market turmoil and rate hikes helped equities short-term but could
pressure the economy if rates rise too aggressively.
Overall Assessment
Berkshire’s Japan
portfolio is a textbook example
of Buffett-style investing: buying high-quality, undervalued businesses with
strong moats and shareholder returns, financed cleverly, and held long-term. It
has delivered outsized gains amid Japan’s transition from deflation to
inflation/reflation. As of mid-2026, it remains a high-conviction, performing
allocation representing a meaningful but manageable portion of Berkshire’s
equity portfolio.
For the absolute
latest stakes and values, refer to Japanese regulatory filings (more timely for
these holdings) or Berkshire’s upcoming shareholder letter/13F filings.