Warren Buffett is Shifting his Focus to Japan

Uncle Warren’s on a trip to Japan, nearly 10,000 miles from Omaha, and the best America’s banks can hope for are souvenirs.

This week, Warren Buffett’s Berkshire Hathaway increased its stake in Japan’s five top trading houses while issuing yen bonds for the first time in months. The move marks a curiously timed, yet notable, straying interest abroad for Omaha’s folksy oracle. Heck, Japan doesn’t even have a Dairy Queen.

The Oracle of Osaka

At 92 years young, Buffett may be growing a bit cold as he ages. Example: back when Goldman Sachs was desperate to raise capital in the early days of 2008’s global financial meltdown, Buffett poured $5 billion into Wall Street’s favorite death star. That investment eventually turned into a $3.7 billion payday for Berkshire, but Buffett let outsiders believe that patriotic altruism played a major role in his investment. “The system had stopped. I describe it as an economic Pearl Harbor, except it was the economy that had gotten hit by an unbelievable force,” Buffett told Vice News in 2018.

But as this year’s banking crisis unfurled, Buffett and Berkshire were nowhere to be found. “Be fearful when others are greedy and greedy when others are fearful” Buffett has famously preached, though he may be adding an addendum to the investment motto: “…and when you’re old and the you-know-what hits the fan, head East:”

• Way back in August 2020, Berkshire disclosed it had acquired roughly 5% in each of the nation’s top five trading houses: Mitsubishi Corp., Mitsui & Co., Sumitomo Corp., Itochu, and Marubeni. But now, Berkshire has increased its stakes to around 7.4% for each company.
• Meanwhile, Berkshire’s marketing of yen bonds makes it the first major international debt issuer during the new Bank of Japan Governor Kazuo Ueda’s reign, with many seeing the move as a signal Berkshire’s ventures in Japan are far from over.

“We feel that these five companies are a cross-section of not only Japan but of the world,” Buffett told Nikkei Asia on Tuesday. “They are really so much similar to Berkshire. They own a lot of different things.” He also added that there are “a few” other Japanese companies he’s always thinking about investing in.

Mint Chip: But while Berkshire’s made strategic investments in Japan, it’s also making strategic divestments out of Taiwan. After pouring some $4 billion into shares of chipmaker TSMC last summer, Berkshire reduced its holdings to just $617 million by the end of the year. Buffett told Nikkei that geopolitical tensions were a “consideration” for the move. That’s something he’s never had to worry about with his beloved stake in Dairy Queen.