Right now, while most investors are running for cover as the US market takes a beating, Warren Buffett is quietly loading up on Japanese trading firms. It’s not a small bet – Berkshire Hathaway now holds stakes in five of Japan’s biggest sogo shosha. I’ve been following this move since he first bought in 2020, and the latest increase during a selloff tells me something deeper is at play. Let me walk you through what he’s doing and why it matters.Key Stat: Berkshire’s average cost basis on these Japanese holdings is estimated around ¥2,000-3,000 per share for some firms, and the recent selloff allowed him to add at even more attractive levels.
1. Why Buffett Is Increasing His Stake in Japanese Trading Firms Now
The US market is in a rough patch – rising rates, cooling consumer spending, and tech stocks getting hammered. But Buffett isn’t a typical panic seller. He’s a contrarian. The Japanese trading houses (Mitsubishi, Mitsui, Itochu, Marubeni, Sumitomo) are basically conglomerates that own slices of everything from energy and metals to food and textiles. They benefit from global inflation and supply-chain disruptions, which are still very much alive.I remember chatting with a fund manager friend who dismissed Japanese stocks as “stuck in the ’90s.” But look closer: these firms have been restructuring for years, paying down debt, and boosting dividends. Plus, they trade at single-digit P/E ratios with solid cash flows. During a US selloff, when growth stocks get crushed, Buffett loves buying cash-generating, undervalued businesses with strong moats.
I personally think Buffett’s move is also a currency play. The yen is cheap right now. He’s essentially buying dollar-cost averaged yen assets at a discount. When the yen rebounds, he gets an extra kicker.
The Financing Twist: Why He Used Yen-Denominated Bonds
Here’s the part that surprised me: Berkshire didn’t sell any US stocks to fund these purchases. Instead, it issued yen-denominated bonds at ultra-low interest rates (around 0.5-1% in recent years). That means he’s borrowing cheap yen to buy yen assets – a classic “carry trade” with a dividend yield overlay. The Japanese trading firms pay decent dividends (2-4%), so he’s pocketing the spread. Genius, right?
2. A Closer Look at the Five Trading Houses Buffett Is Buying
Let’s break down each firm and why Buffett might be attracted to them. These aren’t your typical tech startups – they’re old-school heavyweights with fingers in many pies.
Company
Key Business Focus
Dividend Yield (Approx.)
Berkshire Stake
Mitsubishi Corp
Energy, metals, machinery
4.2%
~8% (max allowed)
Mitsui & Co
Energy, chemicals, infrastructure
3.8%
~8%
Itochu Corp
Textiles, food, metals
4.5%
~8%
Marubeni Corp
Agriculture, energy, power
5.0%
~8%
Sumitomo Corp
Metals, transportation, finance
3.5%
~8%
The cap at 9.9% is intentional – Berkshire doesn’t want to trigger regulatory approvals. But within that limit, he’s taking maximum positions. That tells me he’s serious about holding these for the long term.
Itochu: The Standout in the Group
Itochu is the one that catches my eye. It’s less exposed to volatile commodities and more into consumer goods like convenience stores and food. That gives it a defensive edge. No wonder Buffett likes it – it’s the closest to a “consumer monopoly” among the five.
3. How the US Market Selloff Creates Opportunity for Buffett
The US selloff isn’t a crash – it’s a rotation. Tech and growth are bleeding, but value and international stocks are actually holding up. The S&P 500 may be down 10% from highs, but the Nikkei 225 has been relatively stable. Buffett sees this divergence and is capitalizing on it.What’s more, the US Federal Reserve’s rate hikes have strengthened the dollar, but the yen has weakened. That makes Japanese exports cheaper, boosting profits for trading firms that deal in global commodities. So while US companies face margin pressure, Japanese trading houses get a tailwind from currency and commodity pricing.Real Talk: This isn’t just about Japan. Buffett’s move is a bet against the US growth narrative for now. He’s saying, “I’ll take your safe haven dollar and convert it into undervalued yen assets that pay me to wait.”
4. Key Takeaways for Your Portfolio
I’m not saying you should copy Buffett exactly – you don’t have his billions or his low-cost borrowing capability. But there are lessons you can apply:
Think globally: When your home market overheats, look abroad for value. Japan is one of the most overlooked developed markets.
Use dividend yield as a floor: The 3-5% dividends from these stocks provide a cushion even if share prices drift.
Currency matters: If you’re a US investor, consider hedging or simply buying yen-denominated assets when the yen is cheap.
Don’t fight the Fed – follow the flow: Buffett’s yen bonds show how smart money uses low rates to fund high-yield investments. You can’t issue bonds, but you can buy ETFs like DXJ (hedged) or individual stocks via ADRs.
A mistake I see retail investors make: they buy Japanese stocks when the yen is strong and panic-sell when it weakens. That’s the exact opposite of what Buffett does. Be patient.
5. Frequently Asked Questions
Why didn’t Buffett sell US stocks to fund his Japanese buys?
He uses yen-denominated bonds because the interest rates in Japan are near zero. Selling Apple shares would trigger capital gains tax and lose exposure to a high-conviction holding. By borrowing in yen, he keeps his US portfolio intact while gaining cheap leverage into Japan. It’s cost-efficient and tax-smart.
Which Japanese trading firm has the most growth potential?
I’d put my money on Itochu because of its diversified consumer focus. It’s less cyclical than Mitsubishi or Mitsui. But Sumitomo has been restructuring aggressively, shedding non-core assets, which could unlock value. Among the five, Itochu and Marubeni have the highest dividend growth rates.
Should I buy Japanese trading stocks now after Buffett’s move?
Only if you share his long-term horizon. These stocks are not momentum plays. They’re slow and steady. If you can stomach 10-20% drawdowns in yen terms and hold for 5+ years, they offer a solid risk-reward. But don’t chase – buy on dips, just like Buffett does.
How can I invest in Japanese trading firms from the US?
Most trade as American Depositary Receipts (ADRs): Mitsubishi (MSBHY), Mitsui (MITSY), Itochu (ITOCY), Marubeni (MARUY), Sumitomo (SSUMY). Be aware of currency conversion fees and dividend withholding tax (10% for US residents under the treaty). Also, volume can be low, so use limit orders.
This analysis is based on publicly available filings and market observations. No financial advice intended.
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