- Warren Buffett's Japan bets have nearly tripled in value to over $17 billion in under three years.
- Buffett's Berkshire Hathaway has raised its stakes in five Japanese companies from about 5% to 7.4%.
- The quintet of stocks have gained over 180% on average since Buffett disclosed his wagers.
Warren Buffett's surprise bet on five Japanese companies has nearly tripled in size to $17 billion in under three years. The surge reflects the famed investor buying more shares, and the quintet's stock prices soaring to multi-decade highs.
Buffett's Berkshire Hathaway conglomerate, which mostly invests in the US, surprised many close followers when it disclosed 5% stakes in five Japanese trading houses — Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo — in August 2020. Berkshire has ramped up those positions to about 7.4% across the board, Buffett disclosed in May.
Meanwhile, the five Japanese stocks have gained an average of 181% since Buffett's original disclosure. The upshot is that Berkshire's holdings have ballooned in value from $6 billion to about $17 billion today.
The Japanese bets now rank among Berkshire's largest positions. Only nine of its top 15 stock holdings were worth more than $4 billion at the end of 2021; three of its Japanese wagers are valued above that figure today.
Buffett laid out his rationale for the Japanese foray during Berkshire's annual meeting in May. He noted the companies were "ridiculously" cheap, well-established in familiar industries, focused on the long term, and big enough to have a material impact on Berkshire's earnings.
The Japanese government has also been pressing the country's listed companies to return more money to investors, likely boosting their appeal to the likes of Berkshire.
Improving shareholder returns were likely "a bigger factor in Buffett's decision to buy Japanese trading house than some of the other factors," Andrew McCagg, a senior client portfolio manager at Nomura Asset Management UK, told Insider in an email.
"The great value placed on good behavior by Japanese corporations may also have played a role," he continued. "However, that alone wouldn't move the needle if they couldn't find undervalued companies in industries/sectors they understand, for which they see a long-term roadmap for improvement."