In the summer of 2020, Warren Buffett, the former CEO of Berkshire Hathaway, announced that the large conglomerate had taken over a 5% stake in each of Japan's five largest trading houses, which are also known as "sogo shosha." Today, those positions are collectively valued at close to $41 billion, consuming over 13% of Berkshire's massive $308 billion equities portfolio.
In his first annual letter to shareholders, Berkshire's new CEO, Greg Abel, noted that he views these five positions as core holdings of the company and similar to Berkshire's major investments in its top U.S. stocks, in terms of "importance and long-term value creation opportunity." Yet because these businesses are fairly complex and operate outside the U.S., very few investors are talking about them. Here's what you need to know.
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What is a trading house? And which ones did Berkshire buy?
At face value, investors may interpret a trading house as some kind of investment firm. While they do make investments, the trading houses are more akin to large conglomerates like Berkshire Hathaway and operate many different businesses, including energy, finance, banking, chemicals, machinery, minerals, food, and more. In fact, Buffett said he saw similarities to Berkshire in the trading houses.
There's also a global aspect to these five companies, which play a big role in obtaining resources from abroad that Japan needs but aren't made domestically.
One difference, however, is that while Berkshire has many subsidiaries, the Japanese trading houses consist of tens, and sometimes hundreds, of smaller companies that are not technically subsidiaries because all or most of them own small stakes in one another. This type of practice is not allowed in many countries, such as the U.S.
However, it's possible Buffett may have found this an attractive moat because the structure makes these smaller companies somewhat reliant on one another's success, which could make them more resilient, though there could be drawbacks to this kind of cross-ownership, to be sure. The five Japanese trading houses Berkshire owns are Mitsubishi Corporation (MSBHF -1.07%), ITOCHU Corporation (ITOCY -1.19%), Mitsui & Co. (MITSF -0.82%), Marubeni Corporation (MARUY -0.91%), and Sumitomo Corporation (SSUMY -1.63%).
Among these companies, Berkshire's largest position is in Mitsubishi, which is also the largest Japanese trading house.
OTC: MSBHF
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Have these been good investments, and are they good investments now?
Many investors often focus on Berkshire's largest U.S. equity holdings, such as Apple. While there's nothing wrong with that, Berkshire has made some outstanding investments in foreign companies. For instance, Buffett purchased a stake in the Chinese electric vehicle maker BYD in 2008. The company exited the position last year, after a 17-year stint during which BYD shares increased by 4,300%.
Berkshire already seems to have struck gold with its investments in the five large Japanese trading houses. Abel's letter to shareholders disclosed that the company's positions in the five Japanese trading houses had more than doubled from the time they were first purchased to the end of 2025, and that doesn't include the $862 million in dividends Berkshire has also received during this period.
In Buffett's final annual letter to shareholders in 2025, Buffett said that Berkshire purchased these stocks because they liked what the financials were saying and were "amazed" at how low each stock traded.
Another thing that makes them attractive is that they return substantial capital to shareholders.
"Their shareholder return policies are consistent with Japan's recent corporate governance reforms," Hennessy Japan's Masakazu Takeda said, according to a Morningstar article from last year. "They have a lot of investment holdings, ample cash flows, and lots of room to increase dividends and share buybacks."
Berkshire certainly helped put these stocks on the map for investors who didn't historically purchase Japanese equities. Their strong performances in recent years have made some of them pricey on valuation.
But if you're looking to diversify away from U.S. stocks, these five trading houses are not a bad place to start, especially given their solid dividends and share repurchase activity. Most of the major Japanese trading houses are now available on U.S. brokerages.
