Will Buffett's Betting Strategy Work at Japan's Top 5 Trading Companies' Shareholders Meetings?

Interest in Board Approval for Equity Stake Expansion
Focus on Business Collaboration with Berkshire
Also Attention to Stock Split Issues of Each Company

Investor attention is focused on the shareholder meetings of Japan's five major trading companies held on the 23rd. All eyes are on whether they will approve additional investments from "the Oracle of Omaha," Warren Buffett, and whether business cooperation with Berkshire Hathaway, the investment company led by Buffett, will be decided at this general meeting.

Among Japan's five major trading companies, Mitsubishi, Itochu, Marubeni, and Sumitomo will hold their shareholder meetings on the 23rd. This general meeting is the first face-to-face encounter between the companies and shareholders since Buffett visited Japan in April to discuss investment cooperation with the five trading companies.

Warren Buffett, Chairman and CEO of Berkshire Hathaway, USA [Image source=Yonhap News]

Investors are watching to see if the boards will approve Buffett's additional stake acquisition. Earlier, Berkshire Hathaway announced on the 19th that through its subsidiary National Indemnity, it had increased its stake in the five companies from the previous 7.4% to over 8.5%. Berkshire Hathaway also disclosed that "it intends to hold these stocks long-term" and that "Chairman Buffett wants to hold up to 9.9% of each of the five companies' shares." However, Buffett indicated that he would not invest beyond that without board approval.

Bloomberg reported, "If Buffett obtains approval from the boards of the Japanese trading companies, he will not stop investing at raising his stake to 9.9%," adding, "The companies may send a signal to investors at this general meeting on whether they will allow Buffett to hold a significantly large stake."

Whether Buffett and the five major trading companies have discussed business cooperation and whether they will actually collaborate is also a key point to watch at this general meeting. According to Bloomberg, executives from the five trading companies visited the hotel where Buffett stayed during his visit last month to discuss their businesses.

According to anonymous sources, Kenichi Hori, president of Mitsui & Co., and executives from Mitsubishi Corporation explained the future prospects of the healthcare industry and offshore wind power projects to Buffett, respectively. Executives from Itochu Corporation explained the profitability of the textile business.

However, the specific details of these meetings have not been disclosed. Investors are paying close attention to whether the results of these discussions with Buffett will be revealed at this general meeting. Bloomberg forecasts, "Looking at the agenda of this general meeting, since each company has devised business plans to cooperate with American investors, some parts of the (business cooperation) plans with Berkshire Hathaway may be disclosed."

The possibility of stock splits by each company is also a matter of interest. The stock prices of Japan's five major trading companies surged following news of Buffett's increased stake. For example, Mitsubishi Corporation's stock price has risen 72.12% from January to the present. The five trading companies are considering stock splits and other measures to ease investment difficulties for individual investors amid the sharp rise in stock prices.

The five trading companies are also expected to address issues currently receiving international criticism at this general meeting. The international community has pointed out that even after the Russia-Ukraine war, the five trading companies continue to invest in Russia's liquefied natural gas (LNG) development projects. Among the five, Mitsui & Co., which held its shareholder meeting on the 21st, stated that it has no plans to withdraw from investment in Russia's Far East energy development projects.

This content was produced with the assistance of AI translation services.