“Stock God” Warren Buffett pointed out in his shareholder letter on Saturday that as of the end of last year, investments in Japan’s five major trading companies had brought Berkshire Hathaway a 61% unrealized gain, equivalent to $8 billion!
(Previous summary: Buffett invests $10 billion in Japan’s five major trading companies, Munger: A once-in-a-century opportunity, making money is too easy!)
(Supplementary background: Japan’s stock market hits a 33-year high! Why does it continue to soar? Even the stock god Buffett is increasing his investment?)
Table of Contents:
Berkshire Hathaway’s Investment in Japan’s Five Major Trading Companies Earns a 61% Profit
Netizens Marvel at the Godlike Operation of the Stock God
Deceased Comrade Munger: A Once-in-a-Century Opportunity for Japanese Trading Companies
Warren Buffett, the “Stock God” who leads Berkshire Hathaway, released the annual shareholder letter on the 24th, reviewing the company’s performance in 2023. The company achieved a net profit of $96.2 billion last year, far exceeding market expectations, with cash reserves growing for six consecutive quarters, reaching a record $167.6 billion.
In the letter, Buffett specifically mentioned the profitable Japanese stock market, stating that Berkshire Hathaway has increased its stake in Japan’s five major trading companies to around 9% and plans to continue holding these shares, with the intention of increasing its ownership to 9.9%.
It is understood that since the outbreak of the pandemic in 2020, Berkshire Hathaway has invested over $10 billion by issuing ultra-low-interest yen-denominated bonds to purchase shares of Japan’s five major trading companies, including Mitsubishi Corporation, Mitsui Bussan, Itochu Shoji, Marubeni, and Sumitomo. This has allowed Berkshire Hathaway to make a fortune last year.
According to details in the shareholder letter, since July 2019, Berkshire Hathaway has paid a cost of 1.6 trillion yen (approximately $10.63 billion) for its stake in Japan’s five major trading companies, while the market value of these five companies as of the end of 2023 was 2.9 trillion yen (approximately $19.27 billion). According to the company’s calculations, the return on investment in Japan’s five major trading companies reached a remarkable 61% by the end of last year.
The impressive 61% return rate has amazed the community. Many PTT netizens marveled at the stock god’s foresight and divine operations. By issuing corporate bonds denominated in yen to purchase Japanese stocks, Buffett has managed to avoid the impact of exchange rates on his profits. Some netizens commented, “The key is that the money he used to buy stocks comes from issuing ultra-low-interest yen-denominated bonds. It’s so satisfying” and “Issuing yen-denominated bonds also avoids exchange rate risks. It’s truly a profitable move!”
Some netizens exclaimed, “Retail investors are still mocking Buffett for selling Taiwan GG” and “Using other people’s money to make money by issuing bonds, Buffett is indeed the grandfather” and “Issuing bonds to buy Japanese stocks and earning 340 billion (NTD), given Japan’s near-zero interest rate, this return rate is close to infinity… The stock god is the stock god!”
Regarding this investment, Charlie Munger, the closest comrade of Buffett and vice chairman of Berkshire Hathaway who passed away in November last year, said in an interview in October that such an opportunity may only occur two or three times in a century. However, it is also because Berkshire Hathaway has an outstanding credit rating that it can issue yen-denominated bonds at a very low cost to raise the necessary funds for investment and then invest these funds in stocks with a 5% annual dividend. Munger also revealed that it took Berkshire Hathaway a long time to establish its position in Japan.
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