Warren Buffett's Berkshire Boosts Investments in Five Japanese Firms

Warren Buffett, the renowned investor and CEO of Berkshire Hathaway Inc., recently shared insights into the company's financial performance in his letter to shareholders, highlighting impressive results from the fourth quarter. He reported that Berkshire Hathaway's performance surpassed his expectations, particularly noting its substantial investments in Japan.

Investment Overview: Buffett referred to Berkshire's increasing stake in Japan as a "small but important exception" to its primary focus on U.S.-based investments. The Japanese companies in which Berkshire has invested exhibit a business model that closely resembles that of Berkshire itself. These firms maintain interests in a diverse range of businesses, many headquartered in Japan, while others operate on a global scale.

Berkshire began purchasing shares in these firms nearly six years ago, with their first investment occurring in July 2019. The five companies in question are Mitsubishi, Mitsui, ITOCHU, Marubeni, and Sumitomo.

In his letter, Buffett expressed admiration for these companies, stating, "We looked at their financial records and were amazed at the low prices of their stocks. As the years have passed, our admiration for these companies has consistently grown." He emphasized that these companies follow shareholder-friendly practices, such as responsibly increasing dividends, repurchasing shares when beneficial, and maintaining reasonable executive compensation compared to their U.S. counterparts.

Future Leadership: As Buffett mentioned, Greg Abel is set to succeed him as CEO in the near future, and he will likely write the next annual letter to shareholders. Buffett emphasized that both he and Abel appreciate these Japanese firms for their capital deployment strategies, management style, and investor-friendly attitudes.

Buffett also shared his commitment to long-term investments in these Japanese companies, assuring that he would support their boards while keeping holdings below 10% of each company's shares. Interestingly, as Berkshire approaches this threshold, the five companies have mutually agreed to relax this limit, allowing Berkshire to increase its ownership stakes.

Berkshire's financial results were robust, reporting a 71% increase in operating earnings, totaling $14.5 billion for the fourth quarter. Additionally, the company’s cash reserves surged to a new record of $334.2 billion by the end of 2024, marking ten consecutive quarterly growth periods.

Market Response: After the earnings release, Berkshire's class B shares fell by 0.64% on Friday. However, the shares have seen a 6.13% increase in 2025 and a 17.01% rise over the past year. Major ETFs, including the SPDR S&P 500 ETF Trust and the Invesco QQQ Trust ETF, which track the S&P 500 and Nasdaq 100 indices respectively, also experienced declines on Friday, with SPY dropping 1.71% and QQQ falling 2.07%.

Conclusion: Buffett's growing investments in Japan reflect his appreciation for these companies, emphasizing a strategy of responsible capital deployment and long-term commitment.

Buffett, Berkshire, Investments