Warren Buffett in Omaha, Neb., in 2019.
Photo: Nati Harnik/Associated PressWarren Buffett’s Berkshire Hathaway Inc. BRK.B 0.77% took stakes of slightly more than 5% in five of Japan’s most venerable corporate names with big investments in energy.
Berkshire disclosed the investments in Mitsubishi Corp., 8058 7.72% Mitsui MITSY 0.89% & Co., Sumitomo Corp., SSUMY 1.48% Itochu Corp. ITOCY 0.42% and Marubeni Corp. MARUY 0.42% just before the Tokyo stock market opened Monday.
Shares in the five companies finished Tokyo trading up between 4.2% and 9.48%, helping the overall Nikkei Stock Average close 1.1% higher.
Berkshire didn’t say how much it spent to acquire the stakes. Based on the companies’ Friday closing prices, a 5% stake in each would collectively be worth about $6 billion.
The five are often called trading companies, but investment company might be a more precise description. All have stakes in a variety of businesses including interests in energy and mining. Mitsubishi and Itochu each control a major convenience-store chain in Japan.
“I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,” said Mr. Buffett in a statement. He said the five companies “have many joint ventures throughout the world and are likely to have more of these partnerships.”
Itochu Chief Executive Masahiro Okafuji said Berkshire’s investment could be a trigger to revitalize the industry. “It is welcome news that one of the world’s leading investors has shown an interest in Japanese stocks—especially trading companies’ stocks—which have lagged behind international markets,” Mr. Okafuji said.
A Sumitomo spokesman said the company hoped to have good communications with Mr. Buffett, as it does with other investors. Representatives of Mitsui, Marubeni and Mitsubishi declined to comment on the Berkshire investment.
The five companies all have long histories—dating back to the 17th century in Sumitomo’s case—and are considered prestigious employers in Japan. Mitsubishi, Mitsui and Sumitomo sit at the center of keiretsu, loosely affiliated networks of companies that sometimes invest in each other or have joint projects. Mitsubishi Corp. held 20% of Mitsubishi Motors Corp. as of March 31.
Berkshire Hathaway said it may increase its stake up to 9.9% in any of the five companies, depending on price, but it said it would make no purchases beyond that unless the board of the company receiving the investment approves. Berkshire said it intended to hold its Japanese investments for the long term.
The trading companies generally have low stock-market valuations relative to their profits, partly owing to their exposure to energy investments like oil and natural-gas fields. That may have made them attractive to a value investor like Mr. Buffett.
Mr. Buffett has been relatively quiet during the coronavirus pandemic, apart from a deal announced in early July in which Berkshire said it would buy Dominion Energy Inc.’s midstream energy business for $9.7 billion including debt. Berkshire held $146.6 billion in cash at the end of the second quarter, up from about $137.3 billion at the end of the first quarter.
As Mr. Buffett’s cash pile has grown, he has often lamented the surge in prices for all types of assets. Notably, several stock indexes in the U.S. are near all-time highs while billions of dollars have poured into private equity in recent years.
As a result, Mr. Buffett has looked for new targets in unfamiliar markets. The conglomerate owns only a handful of businesses outside the U.S., including Netherlands-based IMC International Metalworking Cos.
—Megumi Fujikawa contributed to this article.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
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Appeared in the August 31, 2020, print edition as 'Berkshire Buys Up Stakes in 5 Storied Japanese Companies.'
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