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Japanese trading house stocks gain as Berkshire Hathaway (BRK-B, BRK-A) Chairman and CEO Warren Buffett praises the firms for increasing dividends, conducting share buybacks, offering less aggressive executive pay packages compared to US companies, and their yen balance strategy.
Berkshire Hathaway maintain holdings of Mitsubishi (8058.T), Marubeni (8002.T), Mitsui (8031.T), Sumitomo (8053.T), and Itochu shares (8001.T), all of which have outperformed the Nikkei 225 (^N225) in the last five year.
Catch up on how Berkshire Hathaway has been adjusting its investment portfolio in recent months, including the firm's five biggest holdings.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
This post was written by Naomi Buchanan.
Now time for some of today's trending tickers. You can scan the QR code below to track the best and worst performing stocks of this session on Yahoo Finances Trending Ticker's page. First up, shares of Japanese trading houses rallying following Warren Buffett's plans to increase holdings in five Japanese trading houses. Now Buffett praised Japan's trading firms for their business practices, including increasing dividends, conducting share buybacks. He also said that his holdings of the five companies are for the very, very long term. We're looking at the reaction here in the stocks today. The market was closed overseas yesterday in because of a holiday. So we're seeing that play out from the news that we got over the weekend here this morning. Now it comes, when it comes to the opportunity here that he does see in some of these names, especially in Mitsubishi, we know that Buffett first showed interest in them back in July of 2019, but he has been very consistent just in terms of his praise. This is very much a follow through of some of that rhetoric here that we have heard over the last several years.
Yeah, and it's played out in the ADRs here. If we can take a look at the performance of these trading houses versus the index over in Japan, the Nikkei 225 here, you can see the outperformance of all of these trading houses versus the Nikkei, which is going to be the bottom line on your screen there. So clearly a successful bet for Warren Buffett so far. It was also interesting in that Berkshire annual letter. He talked about how these trading houses did agree to relax the ceiling on Berkshire holdings, which had been at 10%. They're relaxing that, so they're going to be able to own a little bit more. I wasn't able to see clarification on exactly how much more they're interested in moving forward. Um, but lastly, I'll just add, I thought it was interesting the specific pros that Buffett put forward for these trading houses. He talked about how they, he likes their dividends. They conduct share buybacks when it is sensible, and he also liked that they are not as aggressive in their executive pay as US companies are, which I thought was interesting, a little bit of shade thrown towards the US companies that are maybe overpaying their executives.
Yeah, what was also interesting was just some of the commentary just surrounding currencies, right? And just in terms of the fact that he was once again just very confident in their yen balance strategy, what he described as a yen balance strategy. He also went on to say that there's that he and Greg both have no view on future FX rates here, and therefore, do seek a position that's approximately currency neutrality here. So again, I think that's important to keep in mind, especially when you go back to some of the volatility that we saw over this past summer.
