Warren Buffett’s Japan trading house stock picks hit record highs

BLOOMBERG

Shares of the Japanese trading companies that Warren Buffett has invested in reached record levels this week after announcing earnings and buybacks.
Mitsubishi Corp, the largest, surged as much as 6% to an all-time high after announcing plans to repurchase $2.2 billion worth of shares along with a better-than-expected profit target for the fiscal year through March 2024. Peers Sumitomo Corp and Itochu Corp climbed to records after the results.
The shares were among the top index point gainers on the Topix, though the gauge closed 0.6% lower on Wednesday.
The rising share prices have created big paper gains for famed value investor Buffett, who has held stakes in the companies since 2020. His announcement in April about increasing those stakes helped fuel the latest leg up, dovetailing with the Tokyo Stock Exchange’s drive to raise corporate valuations above book level.
While the commodities-linked firms are all projecting earnings declines for the current period, they’re not as bad as some had feared. The stocks also remain relatively cheap, with both Mitsubishi and Sumitomo still trading below book value. “Earnings for trading companies are basically on an upward trend,” said Hideaki Kuribara, an analyst at Tokai Tokyo Securities Co. “Over the past ten years, trading companies have been trying to strengthen their non-resource sectors in order to increase and stabilise their earnings, and this is now bearing fruit.”