Berkshire said late Sunday, on Buffett’s 90th birthday, it owned just over 5% of each of Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co Ltd and Sumitomo Corp
NEW YORK (Reuters) – Berkshire Hathaway Inc’s $6.2 billion (4.6 billion pounds) foray into Japan’s five largest trading houses may signal billionaire Warren Buffett’s expectation that inflation and a falling U.S. dollar may make international equities more attractive when economies worldwide recover from the coronavirus pandemic. Berkshire said late Sunday, on Buffett’s 90th birthday, it owned just over 5% of each of Itochu Corp <8001.T>, Marubeni Corp <8002.T>, Mitsubishi Corp <8058.T>, Mitsui & Co Ltd <8031.T> and Sumitomo Corp <8053.T>, and said it could increase its stakes to 9.9%.
The trading houses, known as sogo shosha with their diversified business lines including commodity exploration, fit the legendary investor’s taste for classic value stocks, which have lost investor favor. Berkshire investors said they welcomed Warren Buffett‘s wager, at a time U.S. stock valuations are at their highest since the late 1990s tech bubble, lifted by giants such as Apple Inc and Amazon.com Inc , both of which Berkshire invests in.
“The inflation cocktail is being mixed and Buffett is migrating his investment to where you can create value through inflation,” said Bill Smead, chief investment officer at Smead Capital Management, which invests nearly 3% of its assets in Berkshire. “These are companies that will make more money if the price of oil [or] any input goes up.” Prices of gold, inflation-linked bonds and some commodities have surged since March on fears that global central banks’ more than $9 trillion of stimulus to combat the pandemic will spark higher inflation…
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