Berkshire eyes raising stakes in Japan's top trading houses to 15%

Berkshire Hathaway is considering further increasing its stakes in Japan's five major trading houses, Bloomberg reported Thursday (local time).

Okafuji Masahiro, chairman of the Japan Foreign Trade Council and of Itochu Corp., disclosed that he met with Berkshire Hathaway CEO Greg Abel earlier this month. He said Berkshire plans to hold its stakes in the Japanese trading houses for the long term and is also exploring ways to increase them further.

Berkshire currently holds stakes of more than 10 percent each in Japan's five major trading houses — Mitsubishi Corp., Sumitomo Corp., Mitsui & Co., Marubeni Corp. and Itochu Corp.

Abel met with executives from the trading houses during a series of meetings in Japan earlier this month and indicated the possibility of expanding Berkshire's stakes in an interview with the Nikkei.

Berkshire, led by legendary investor Warren Buffett, first invested in the Japanese trading houses six years ago and has steadily increased its holdings since. The company has also regularly issued yen-denominated bonds.

Okafuji said Berkshire is highly satisfied with the trading houses' strong "economic moat," citing their high barriers to entry built on global networks and sophisticated capital allocation capabilities.

"Even if the current stake of around 10 percent were raised to 15 percent, Berkshire would not make a fuss and would be very valuable to us as a shareholder," he said.

Okafuji cautioned, however, that potential conflicts of interest could arise if Berkshire, as both an investor and a shareholder, were to pursue larger business opportunities.