MARUY Marubeni Corp (PK)

By Kosaku Narioka 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 31, 2020).

Warren Buffett's Berkshire Hathaway Inc. 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., Mitsui & Co., Sumitomo Corp., Itochu Corp. and Marubeni Corp. just before the Tokyo stock market opened Monday.

Shares in the five companies surged at least 5% and in some cases more than 10%, helping drive the overall Nikkei Stock Average up 2% in intraday trading Monday.

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."

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. Itochu didn't respond to a request for comment.

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

(END) Dow Jones Newswires

August 31, 2020 02:47 ET (06:47 GMT)

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