A classic that never goes out of style! Berkshire plans to increase its holdings in Japan's top five trading companies to firmly lock in long-term capital with “strong cash flow+dividends+repurchases”

The Zhitong Finance App learned that Japanese trading company positions established during the Buffett era are becoming a long-term arrangement between US insurance and investment giant Berkshire Hathaway, which crosses management handover, rather than waiting to be honored in phased transactions. Berkshire began buying the five major trading companies in July 2019, and it was first publicly disclosed in August 2020 that each company held slightly more than 5% of its shares; since then, its holdings have gradually increased, and the initial shareholding limit was moderately relaxed after receiving the consent of the invested companies. Okafuji Masahiro, chairman of Itochu Corp (Itochu Corp), one of Japan's top five trading companies, said on Wednesday that Berkshire is considering increasing its shares in the Japanese general trading company.

Berkshire Hathaway, who holds the title of “stock god” and has been at the helm for a long time, has held about 10% of the shares in each of these companies for more than 6 years. Buffett, the “stock god” who was at the helm of Berkshire at the time, believed that the five major trading companies had diversified holding structures similar to Berkshire, with low initial allocations and low valuations. At the same time, they also had prudent capital allocation, continuous dividends, reasonable buybacks, and relatively restrained executive remuneration systems.

Abell, who officially succeeded Berkshire veteran Warren Buffett as CEO in January of this year, said in an interview in early September that the group plans to keep the shares of Japan's top five trading companies for decades and may even increase the size of its holdings.

ITOCHU's March announcement also confirmed that Berkshire will increase its voting rights ratio to 10.07% through additional purchases, and is considering continuing to increase its holdings in the future. The core signal released by Masahiro Okato this time is that the will to hold on for a long time has not weakened due to a change of head coach, there is still a possibility that the shareholding ratio will increase further, and emphasizes that even if Berkshire has a higher shareholding ratio, it will not interfere excessively in business activities.

ITOCHU says Berkshire may increase its holdings in Japanese trading companies

According to local Japanese media reports, the core head of an industry lobbying group representing the Japanese trading company said that Berkshire Hathaway is considering increasing its shares in the Japanese trading company.

Japan Trade Association Chairman Okafuji Masahiro said that after meeting with Berkshire CEO Greg Abell earlier this month, he believes the US investment company “plans to hold shares in these trading companies for a long time, and is even considering increasing its holdings.”

Berkshire's shares in Mitsubishi Corporation, Sumitomo Corporation, Mitsui & Co., Marubeni, and ITOCHU all hold more than 10% of their shares. Okato also served as Chairman of ITOCHU Corporation. Abel met with the heads of these companies in Japan earlier this month and said in an interview with “Nihon Keizai Shimbun” that Berkshire may increase its shareholding ratio in these companies.

This American company, previously led by legendary investor Warren Buffett, first invested in a Japanese trading company more than six years ago, and has gradually increased its shareholding ratio since then. The company also regularly issues yen-denominated bonds.

Okato said at the Japan Trade Fair's regular press conference on Wednesday that Berkshire is satisfied with the “economic moat” possessed by Japanese trading companies, including extensive global networks and highly mature capital allocation capabilities. These advantages constitute significant barriers to entry. This is one reason why Berkshire Hathaway invests in these companies.

“Berkshire will not criticize the trading company's business activities,” he said in an interview. “Although Berkshire currently holds about 10% of the shares in these trading companies, the company said that even if the shareholding ratio were raised to 15%, it would not dictate anything. As shareholders, this makes Berkshire extremely valuable to us.”

Okato said that although cooperation between Berkshire and Japanese trading companies is often discussed, the American company is also a shareholder of these companies, so if the two sides seek larger business cooperation, a conflict of interest may arise.

The “Compound Interest Relay” of the Big Five Trading Companies: Changing Leaders, Not Long-term Investorism

The long-term stock price performance of the five major trading companies has significantly surpassed the Japanese market. Using the standard of increase in stock prices from the end of 2020 to the end of 2025, denominated in yen, excluding dividends, Mitsubishi Corporation and Mitsui & Co. have accumulated increases of about 323% and 391%, respectively; Sumitomo Corporation, Marubeni, and ITOCHU have increased by about 296%, 534%, and 233%, respectively, according to yearly increases and decreases disclosed by the market platform.

As a comparison, the Nikkei 225 Index had a cumulative increase of about 84% over the same period. The five companies all clearly led the way in terms of cumulative growth, exceeding about 150 to 451 percentage points. The above comparison is a historical performance of this complete five-year range. It is not the rolling five-year yield up to now, nor the actual return on investment after Berkshire bought in batches, received dividends, and converted to US dollars.

When Buffett was at the helm, Berkshire favored the five major trading companies. The first thing he was interested in was “global management assets+capital allocation capacity,” not just trade business or commodity price exposure. Buffett clearly stated in his 2024 shareholder letter that these companies hold extensive business interests and that their operating methods are similar to Berkshire; what initially attracted him was the contrast between excellent financial records and lower stock prices, and later more recognition of their management, capital use, and attitude towards shareholders, including moderately increasing dividends, repurchasing shares at reasonable times, and more restrained executive remuneration.

After experiencing a sharp rise in the stock prices of the five major trading companies, Berkshire is still willing to hold for a long time, and even consider increasing its holdings, showing that it maintains long-term confidence in the ability of the five major trading companies to continue to generate cash flow, allocate capital effectively, and give back to shareholders through dividends and repurchases.

Okafuji's emphasis on the global network and capital allocation “moat” can be understood as two layers of important value: the first layer is long-term commercial ties and management capabilities, making it difficult for competitors to quickly replicate their business foundation; the other layer is the ability of management to allocate capital between different businesses and choose between reinvestment, repurchase, and dividends. Derived from the allocation mechanism, what is really worth paying for long-term valuations is not the “business diversification” label, but rather whether diversified businesses can continue to generate cash flow and whether retained capital can continue to generate strong return on investment above the cost of capital.

The second level of advantage is that Japanese yen financing is used to match yen equity assets, so that long-term operating returns are compatible with the financing structure. According to Berkshire's 2025 annual report, the cumulative investment cost of the five major trading companies' positions was US$15.382 billion, the market value at the end of the year was US$35.368 billion, and it received dividends of US$862 million in that year; the size of its loans in Japan roughly corresponds to the yen cost of these investments. The average financing cost is 1.2%, and the weighted average remaining period is about 5.75 years. Buffett previously clearly stated that the purpose of using a fixed interest rate for Japanese yen loans is to be as close to the neutral exchange rate as possible, rather than predicting the trend of the yen. Derived from the financial structure, this arrangement can reduce the risk of partial exchange rate mismatches and support long-term holdings with lower financing costs.