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Warren Buffett shocked the Tokyo markets in August last year when he placed a $ 6 billion bet on Japan’s five biggest stock brokers.
Only a year later, his investments started to pay off. Amid rising commodity prices, the collective value of Berkshire Hathaway’s holdings in 5 companies, or “sogo shosha” in Japan, increased by nearly $ 2 billion. These gains of more than 30% exceed the 22% rate of increase of the benchmark Topix index and do not take into account dividend income.
For his part, a Tokai Tokyo Securities analyst, Hideaki Kuribara, expected Buffett to hold onto his investments for a long time because he saw that he had bought at the right time.
Although his stock purchases were successful, the man sometimes referred to by the Japanese in the media as “the god of investment” did not attract the attention of international followers, and instead the high pace of foreign purchases in the Japanese market, the markets have not witnessed an influx of foreign capital due to the lack of certainty about the pandemic and changes in political direction.
Former Prime Minister Shinzo Abe announced his desire to step down, which marked the first change of leadership in seven years.
The five companies, Itochu, Marubeni, Mitsui & Co., Sumitomo and Mitsubishi, appear on the paper unusually suited to Buffett’s “buy what you know” philosophy.
Initially, stocks rose after Buffett’s silver came in, with the Nikkei hitting 30,000 in February for the first time in 31 years. Since that peak, however, the Japanese index has been steadily declining.
The reason for the drop was the surge in Corona virus cases, after the vaccination campaign in Japan was delayed compared to that in the United States and Europe.
The selling behavior has also affected foreign investors, who have seen net sales of Japanese stocks in most of the weeks since Buffett’s investment.
Dalton Investments said last week that Japan has many hidden gems among its listed companies with cheap valuations, with the Topix index trading at a P / E of 14 times, compared to 21 times for the S&P 500.
Although Berkshire has indicated that it could increase its investment in any of the five financial firms to 9.9%, it has yet to report any changes – shareholders are required to disclose an increase or decrease of 1 percentage point of holdings. Berkshire has also not disclosed other investments in Japanese companies, but the disclosure requirement comes after investor ownership exceeds 5% of listed companies alone.
On the other hand, Berkshire Hathaway sold 160 billion yen-denominated bonds, equivalent to $ 1.5 billion, earlier this year, which hinted that they could be reinvested.
For his part, Sparx Group Co. CEO Shuhei Abe said, “Despite the huge gains, Buffett will not be happy with a 30% ROI, and he expects to continue his investment in five companies for longer. period.”
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