Hong Kong, Nov 2 Warren Buffett’s decision to invest billions of dollars in Japan was “a no-brainer” that felt like a gift from God, according to his business partner, CNN reported.
“It was awfully easy money,” Charlie Munger, Buffett’s longtime lieutenant and vice chair of Berkshire Hathaway, said in an interview with the Acquired podcast.
“It was like having God just opening a chest and just pouring money into it,” CNN reported.
In the summer of 2020, Berkshire revealed it had bought stakes of about 5 per cent in each of Japan’s top five trading companies. In total, the American industrial and insurance conglomerate invested $6.7 billion at the time, while telling shareholders it could hold and increase the size of those holdings over the long run.
This year, as Japan’s stock markets rocketed to 33-year highs, Berkshire disclosed it had in fact doubled down, taking its stakes in each company to an average of more than 8.5 per cent. The US giant still has room to run, as it has previously stated it could eventually raise its stakes of each firm to 9.9 per cent, CNN reported.
Japan’s Nikkei and Topix indexes are each up more than 20 per cent so far this year. The firms backed by Berkshire -- Itochu, Marubeni, Mitsubishi Corporation, Mitsui & Co., and Sumitomo -- are known as “sogo shosha” or general trading companies in Japan. They play a vital role in the country’s economy, dealing in a wide range of industries, including energy, technology and manufacturing.
Munger described the investment opportunity as a rare chance to get in on stable assets with huge cash flow and very little risk. “Something like that -- if you’re as smart as Warren Buffett, maybe two, three times a century, you had an idea like that,” said the 99-year-old, CNN reported.
Berkshire was able to pull off its biggest bet outside the US because of Japan’s historically low interest rates, the executive explained. That meant the conglomerate could borrow money cheaply as far as 10 years in advance, and use the funds to buy stocks with 5 per cent dividends, he said, CNN reported.
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