In the first quarter of this year, when people talk about who "ignited" the Japanese stock market - helping it reach a new historical high after more than 30 years, it is easy to associate it with the "stock god" Buffett. So, if Buffett hasn't adjusted his holdings recently, what about his book losses in this round of Japanese stock market crash?
According to industry insiders, as of Monday, the book value of these Japanese stocks held by the "Omaha Prophet" had evaporated about 980 billion yen (about 6.7 billion US dollars) in the recent market crash. However, with the recovery of the Japanese stock market, as of Wednesday's close, the loss has narrowed to about 550 billion yen (3.8 billion US dollars).
According to industry compiled data, Berkshire Hathaway holds an average of 8.2% of shares each in Itochu Corporation, Marubeni Corporation, Mitsubishi Corporation, Mitsui&Co., and Sumitomo Corporation.
In the recent sharp decline, Marubeni and Mitsui&Co. have suffered the most, with a drop of 31% in the first three trading days of August.
Due to concerns that the appreciation of the yen would reduce overseas income, the decline of these Japanese trading companies has even exceeded the overall market in the near future.
Industry hot topic: Will stock gods still increase their positions?
However, although the book losses are quite obvious, some industry insiders currently speculate that the valuation decline of these Japanese trading companies beloved by Buffett may actually provide him with an opportunity to buy more stocks again.
As of Wednesday, the forward P/E ratios of Marubeni and Mitsui&Co. have dropped to 7.5 times and 9.1 times respectively, which is comparable to the levels when Buffett increased his holdings from April to June last year.
Mineo Bito, President and CEO of Bito Financial Service, said, "It would be great if Buffett could buy these stocks at a cheaper price." Since 2014, Bito has been attending Berkshire Hathaway's annual shareholder meeting in Omaha, USA.
T& Hiroshi Namioka, Chief Strategist of D Asset Management Co., also believes that "Buffett has always been successful in value investing, and perhaps he sees the current valuation of Japanese stocks as an opportunity
If Berkshire Hathaway decides to increase its holdings in Japanese stocks now, it is clear that it has a large amount of cash to squander. According to Berkshire Hathaway's latest financial report released over the weekend, the company's cash reserves reached a record high of $276.9 billion in the second quarter of this year, and it reduced its stake in Apple by nearly 50% in the second quarter. However, based on his past trading style, he may be more inclined to raise funds in the Japanese market to avoid exchange rate risks.
Buffett first disclosed his holdings in these five major Japanese trading companies in 2020 and stated that Berkshire Hathaway would not acquire more than 9.9% of these companies' shares unless specifically approved by their boards of directors. In February of this year, Berkshire Hathaway reported a holding income of $8 billion for five companies.
Buffett's recognition of shareholder friendly policies in these companies has attracted more attention from global investors to Japanese stocks in recent years. Before this round of sharp decline, the Japanese stock market had just hit a new historical high in July.
Some people speculate that Buffett may turn his attention to Japanese insurance companies and banks in the next step, but Bito believes that the "stock god" will still focus on Japanese trading companies and be committed to finding ways to cooperate.
Bito said, "He really likes trading companies because they share similarities with Berkshire Hathaway - both are conglomerates engaged in multiple businesses. I can't imagine him selling his holdings at this time