Warren Buffett bets on Japanese stocks: Berkshire Hathaway continues to benefit enormously

• Buffett’s Japan strategy is paying off
• Berkshire Hathaway profits from Japanese trading houses
• Political reforms in Japan strengthen markets

Warren Buffett’s investments in Japan continue to perform well: According to Fortune, Berkshire Hathaway has made around $24 billion in profits in just six years through investments in five major Japanese trading houses. The original investment of around $6.25 billion in 2020 was almost quadrupled. Even after stepping down as CEO, the legendary investor shows that his investment strategies are working.

Warren Buffett’s long-term strategy is paying off

Back in 2020, Berkshire Hathaway announced that the stakes in the so-called “sogo shosha”, large and diversified Japanese trading companies, were part of a long-term strategy and that the company was open to increasing the shares under the right conditions. The “sogo shosha” includes Mitsubishi, Mitsui & Co., Itochu, Marubeni and Sumitomo. These broadly diversified companies are active in areas ranging from energy to raw materials to industrial and consumer goods and together form Berkshire Hathaway’s core portfolio in Japan.

In fact, according to various SEC filings, Berkshire Hathaway increased its holdings several times, especially in 2023 and 2024. Today, the Japanese portfolio is worth over $30 billion, as a Fortune report points out. This is the result of both Buffett’s smart decisions on undervalued stocks and economic policy reforms in Japan.

Berkshire Hathaway bets on Japan: The right place at the right time?

When Buffett placed his bets, the situation was anything but certain. Japan’s stock market had experienced little growth for nearly 30 years, a period that became known as the “lost decades.” Many investors would have hesitated, but Buffett seized the opportunity.

According to Fortune, the purchases were partly financed through cheap loans in Japanese yen with around one percent interest, while the companies’ dividend yields were around four percent – a leveraged investment that more than covered the costs.

Political conditions also contributed to success: Under Prime Minister Sanae Takaichi, Japan adopted pro-growth and deregulated measures. She made ending “excessive fiscal austerity” – as she declared in a press conference – the central focus of her election campaign, which gave her a legislative supermajority and made it easier to implement her economic agenda. This policy led to record highs on the Nikkei and a significantly larger rise in Japanese stock markets compared to the S&P 500.

Buffett’s Japan bet: International diversification as a success factor

Buffett’s Japan bet impressively shows that international diversification can bring high returns in the long term. While U.S. stocks performed solidly, international markets significantly outperformed, prompting some investors to reduce their exposure to U.S. assets – a trend discussed under the slogan “Sell America.”

“It has worked very well so far, but we will stay in these stocks for 10, 20 years,” Buffett explained in an interview with CNBC in 2023. For investors, this shows that the combination of stable companies, favorable valuations and favorable political conditions can offer exceptional opportunities. While Berkshire Hathaway remains heavily invested in US assets, the Japan portfolio is likely to continue to play a central role in the coming years.

Bettina Schneider / editorial team finanzen.net

This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.

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