“Stock God” Warren Buffett pointed out in his shareholder letter on Saturday that as of the end of last year, investments in Japan’s five major trading companies have brought Berkshire Hathaway a 61% unrealized return, equivalent to $8 billion!
(Previous summary:
Buffett invests $10 billion in Japan’s five major trading companies, Munger: A once-in-a-century opportunity, easy money!)
(Background:
Japanese stock market hits a 33-year high! Why does it continue to soar? Buffett also increases investment?)
Table of Contents:
Berkshire Hathaway’s Investment in Japan’s Five Major Trading Companies Earns 61%
Netizens Marvel at the Stock God’s Brilliant Moves
Deceased comrade Munger: An Opportunity of a Century for Japanese Trading Companies
In Berkshire Hathaway’s annual shareholder letter released on the 24th, led by Warren Buffett, the company reviewed its performance in 2023. The company achieved a net profit of $96.2 billion last year, far exceeding market expectations. Its cash reserves have grown for six consecutive quarters, reaching a record-breaking $167.6 billion.
Buffett specifically mentioned the profitable Japanese stock market in the letter, stating that Berkshire Hathaway has increased its holdings in Japan’s five major trading companies to around 9% and plans to continue holding these shares, with the goal of increasing its stake to 9.9%.
It is understood that since the outbreak of the pandemic in 2020, Berkshire Hathaway has invested over $10 billion by issuing ultra-low-interest yen bonds, buying shares of Japan’s five major trading companies, including Mitsubishi Corporation, Mitsui Bussan, Itochu Shoji, Marubeni, and Sumitomo. This has allowed Berkshire Hathaway to make huge profits last year.
Further reading:
Buffett invests $10 billion in Japan’s five major trading companies, Munger: A once-in-a-century opportunity, easy money!
The details in the shareholder letter indicate that since July 2019, Berkshire Hathaway has paid approximately 1.6 trillion yen (about $10.63 billion) for its holdings in Japan’s five major trading companies, which had a market value of 2.9 trillion yen (about $19.27 billion) as of the end of 2023. According to the company’s calculations, the investment in Japan’s five major trading companies had an astonishing return rate of 61% by the end of last year.
The impressive return rate of 61% has amazed the community. Many PTT netizens marvel at the Stock God’s foresight and brilliant moves. Through issuing company bonds to borrow yen at ultra-low interest rates and buying Japanese stocks, profits have been shielded from the impact of exchange rates. Some netizens commented, “The key is that the money he used to buy stocks came from issuing ultra-low-interest yen bonds. It’s so satisfying!” “Issuing bonds and avoiding exchange rate risks, really making a killing!”
Some netizens also said, “Retail investors are still making fun of Buffett for selling Taiwanese stocks.” “Using other people’s money to make money, he deserves to be called Grandpa Buffett.” “Issuing bonds to buy Japanese stocks and earning 340 billion Taiwan dollars, considering Japan’s nearly 0 interest rate at present, this return rate is close to infinity… Buffett is truly the Stock God!”
Regarding this investment, Charlie Munger, Berkshire Hathaway’s Vice Chairman and Buffett’s closest comrade who passed away at the end of November last year, had said in an interview in October that such opportunities may only occur two or three times in a century. However, it is also because Berkshire Hathaway has an outstanding credit rating that it can issue yen bonds at very low costs to raise the necessary funds for investment, and then invest these funds in stocks that yield 5% dividends annually. Munger also revealed that it took Berkshire Hathaway a long time to establish its position in Japan.
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