Yahoo Finance

Key Takeaways

• Warren Buffett's Berkshire Hathaway has raised its stakes in five Japanese trading houses, according to reports.

• Buffett had said in his annual letter to shareholders that it was likely the firm would buy more shares of the Japanese conglomerates.

• After selling stocks throughout 2024, Berkshire Hathaway finished the year with more than $330 billion of cash and cash equivalents, about twice its cash holdings at the end of the prior year.

Warren Buffett’s Berkshire Hathaway (BRK.A)(BRK.B) has reportedly raised its stakes in five of Japan’s largest trading houses.

Berkshire on Monday disclosed it had increased its stakes in the five trading houses—Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo—by between 1 percentage point and 1.7 percentage points, giving the firm stakes ranging from 8.5% to 9.8%, according to The Wall Street Journal.

Buffett said in his annual letter to shareholders three weeks ago that he was likely to buy more of the firms’ stocks. He praised their management for their prudent allocation of cash and, by American standards, modest executive compensation arrangements.

When Buffett began buying the stocks in 2019, he agreed not to acquire more than 10% of any of the companies, according to his shareholder letter. He recently disclosed that the firms had agreed to relax that restriction, giving Berkshire the freedom to add to its holdings beyond the purchases disclosed Monday.

Berkshire Cash Reserves Doubled in Last Year

Buffett has been a net seller of stocks for the last year. Berkshire’s cash pile totaled $334.2 billion at the end of last year, the latest annual report said, more than twice its size the prior year. Though Buffett insisted in his annual letter that, despite the reduction in Berkshire’s tradable securities portfolio, a “substantial majority” of Berkshire investors’ money remains in equities.

Buffett’s stock sales have set off alarm bells for some investors wary of soaring valuations. Those concerns have run headlong into President Trump’s tariff policies in recent weeks, causing the S&P 500 to fall into its first correction since 2023 last week. The uncertainty surrounding tariffs and their consequences have partially undermined the “U.S. exceptionalism” narrative that had driven the American stock market’s outsized returns over the last two years.

Japanese stocks, on the other hand, have been trading sideways for the past year after rallying in 2023. The Nikkei 225 Index is down about 6% in the past year, while the S&P 500 has—even with its recent pullback—advanced nearly 10%.

Read the original article on Investopedia