Warren Buffett
Gary Miller | CNBC
They say 90 is the new 70, and that may be true in the case of Vern Run Buffett.
The chairman and CEO of Berkshire Hathaway announced today on his 90th birthday that his company has acquired a slightly more than 5% stake in each of the five leading Japanese trading companies. Companies Itochu Corp. Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp. Berkshire said it acquires the holding in about 12 months through regular purchases on the Tokyo Stock Exchange. Based on the closing price of trading houses on Friday, 5% stake in each will be about 6. 6.25 billion.
Japanese trading companies – known as “Sogo Shosha” – are an organization that imports everything from energy and metals to food and textiles to resource-scarce Japan. They also provide services to manufacturers. Commercial houses have helped the Japanese economy grow and contribute to the globalization of business there. But as they have stepped up their footsteps abroad, they have become even more sensitive to global forecasts such as the financial crisis a decade ago. Business houses also face increasing competition from venture capitalists and private equity funds.
For Buffett, the move is no quick commercial game. Berkshire says it wants to keep investments for the long term, and that price could increase its holding in any company to a maximum of 9.9%. Berkshire also vowed not to buy more than 9.9% stake in any company unless approved by the board of directors of the trading companies.
Describing his intentions to invest in trading houses, Berkshire pointed to its long-term history, passive holdings in companies such as Coca-Cola Co., American Express Co., and Moody’s Corp., each lasting several decades.
“Berkshire Hathaway is pleased to participate in the future of Japan and the five companies we have selected to invest in,” Mr. Buffett added, adding that trading houses have many joint ventures around the world. “I hope there will be opportunities for mutual benefit in the future,” he said.
Berkshire also said that despite its large, yen-denominated bets, it will have little exposure to currency fluctuations, as it has 255.5..5 billion yen-denominated bonds (9 9.93 billion) from 2023 to 2060. Will mature on different dates.
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