Gerry Miller | CNBC
They say 90 is the brand new 70, and in Warren Buffett‘s case it might be true.
The chairman and CEO of Berkshire Hathaway introduced immediately, on his 90th birthday, that his firm has acquired a barely greater than 5% stake in every of the five leading Japanese trading companies. The companies are Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp. Berkshire stated it acquired the holdings over a roughly 12-month interval via common purchases on the Tokyo Stock Exchange. Based on Friday’s closing costs for the trading homes, a 5% stake in every could be valued at roughly $6.25 billion.
The Japanese trading companies — often called “sogo shosha” — are conglomerates that import every little thing from power and metals to meals and textiles into resource-scarce Japan. They additionally present companies to producers. The trading homes have helped develop the Japanese financial system and contributed to the globalization of enterprise there. But as they’ve prolonged their footprint abroad, they’ve additionally turn into extra weak to international predicaments, just like the monetary disaster from a decade in the past. The trading homes additionally face rising competitors from enterprise capitalists and personal fairness funds.
For Buffett, the transfer isn’t any fast trading play. Berkshire says it intends to carry the investments for the long run, and that it might enhance its holdings in any of the companies as much as a most of 9.9%, relying on worth. Berkshire additionally pledged to make no purchases past a 9.9% stake in any of the companies until given approval by the trading companies’ boards of administrators.
In describing its intentions for the funding in the trading homes, Berkshire pointed to its historical past of long-term, passive holdings in companies like Coca-Cola Co., American Express Co., and Moody’s Corp., which every span a number of many years.
“I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,” stated Mr. Buffett, including that the trading homes have many joint ventures across the globe. “I hope that in the future there may be opportunities of mutual benefit,” he stated.
Berkshire additionally stated that regardless of its giant, yen-denominated guess, it might have little publicity to foreign money fluctuations as a result of it holds 625.5 billion of yen-denominated bonds ($5.93 billion) that can mature at numerous dates from 2023 via 2060.