Shares of Japan's five major trading houses jumped over 5% in early trade on Tuesday, following Warren Buffett's announcement that Berkshire Hathaway (NYSE: BRKa) plans to increase its ownership stakes in these companies.

The biggest gainer was Mitsubishi Corp, which surged 7.5%, while Mitsui & Co, Sumitomo Corp, Itochu, and Marubeni each gained over 5%.

Buffett's Expanding Bet on Japan

In his annual shareholder letter, released over the weekend, Buffett revealed that the five trading houses agreed to ease previous ownership limits, which had capped Berkshire's stakes below 10%.

📌 Key Highlights from Buffett's Letter:

• Berkshire Hathaway has been investing in Japan's trading houses since 2019.
• The total investment in these companies stood at $23.5 billion at the end of 2024.
• Current holdings cost $13.8 billion, with an expected dividend income of $812 million in 2025.
• Buffett stated that Berkshire's ownership will "increase somewhat" over time.

Despite these gains, Tokyo's Nikkei 225 index was down 1.57%, as Japanese markets reopened after a public holiday.

Understanding Japan's Trading Houses ("Sogo Shosha")

These conglomerates operate across multiple industries, serving as intermediaries in commodities, logistics, shipping, and steel production. Their diversified portfolios make them resilient to economic fluctuations, a key reason why Buffett sees them as long-term value plays.

For deeper financial insights into these trading houses:

• Full Financials API - Get access to their detailed financial statements.
  • 🔗 View Financials Here
• Ratios (TTM) API - Analyze their profitability, efficiency, and valuation metrics.
  • 🔗 Check Key Ratios

Buffett's Japan Strategy and Market Impact

📊 Why is Berkshire doubling down on Japan?

• Stable cash flow from trading houses, backed by high dividend yields.
• Diversification beyond the U.S. market, especially in energy, natural resources, and supply chain businesses.
• Undervalued stocks with strong return on equity (ROE) and steady earnings growth.

With Buffett signaling further investments, Japan's trading houses could see sustained momentum, drawing interest from global investors eyeing stable, dividend-paying stocks.