Japan Stock AlphaBerkshire × Japan
What Berkshire bought in Japan — and why it worked
In August 2020, Warren Buffett quietly disclosed that Berkshire Hathaway had taken roughly 5% stakes in five of Japan's largest trading companies. Most American investors had never heard of "sōgō shōsha." Even those who knew the names didn't know how to value them.
Six years on, the bet has become one of Berkshire's best international investments. In May 2026, Berkshire raised its stakes in Sumitomo and Marubeni above 10% — meaning all five trading houses now sit above the 10% threshold. Berkshire also widened its Japan exposure that year with a strategic stake in Tokio Marine.
"They are similar in many ways to Berkshire itself."
— Warren Buffett, 2023 letter
What is a sōgō shōsha?
The five companies — Mitsubishi, Mitsui, Itochu, Marubeni, and Sumitomo — are best understood as conglomerates. They invest in, trade, and operate businesses spanning energy (LNG, oil), metals (iron ore, copper), food and agriculture, industrial machinery, retail (FamilyMart for Itochu), real estate, and finance.
Think Berkshire Hathaway, but with a global trading and supply-chain backbone built up over a century.
Why was the valuation so cheap?
For years, despite returning huge capital to shareholders and steadily growing earnings, the trading houses traded at price-to-earnings ratios in the high single digits — well below US peers. Several factors:
- Conservative Japanese accounting hides a lot of value (real estate at historical cost, cross-shareholdings)
- Foreign investors largely ignored Japan after decades of stagnant returns
- The conglomerate structure makes them harder to model than focused companies
Valuations have re-rated, but a gap remains
After significant share-price gains, the trading houses now trade at forward P/E ratios in the low-to-mid teens — well above the high-single-digit levels of 2020-2024, but still meaningfully below the S&P 500's ~21×. Dividend yields are still attractive at 2%+, with continued buybacks providing additional shareholder return.
Forward P/E — Sōgō Shōsha vs S&P 500
All five still trade at a discount to the S&P 500, while yielding nearly double on dividends.
Forward P/E based on consensus FY2027/3 estimates. Approximate as of May 2026.
| Company | Fwd P/E | P/B | Yield | ROE |
|---|---|---|---|---|
| Mitsubishi Corp. | ~14× | ~1.6× | ~2.1% | ~12% |
| Mitsui & Co. | ~13× | ~1.5× | ~2.5% | ~12% |
| Itochu Corp. | ~16× | ~2.4× | ~2.0% | ~16% |
| Marubeni Corp. | ~13× | ~1.7× | ~2.4% | ~14% |
| Sumitomo Corp. | ~14× | ~1.4× | ~2.4% | ~11% |
| S&P 500 | ~21× | 4.3× | 1.3% | ~19% |
Approximate, based on consensus forward earnings estimates following FY2026/3 results. Figures rounded.
How the bet has paid off
For investors who followed Buffett into the trading houses in 2020, returns have been extraordinary — even in dollar terms with the yen drag.
$1,000 invested in Jan 2020 — trading houses vs benchmarks
USD-adjusted, price-only comparison. Cash dividends are excluded by design, because dividend reinvestment and taxes differ by investor. Even on a price-only basis, the trading-house rerating is visible.
Data as of year-end 2025. Approximate, price return only. Dividend returns are not included in this chart.
What the price-only chart leaves out
The chart above intentionally uses price-only returns. For cross-border investors, dividend reinvestment is not straightforward: Japanese withholding tax, home-country tax rules, broker treatment, and reinvestment timing can all change the realized outcome.
That does not mean dividends are unimportant. The trading houses have become more shareholder-return focused, with higher ordinary dividends and progressive dividend policies at some companies. Large buyback programs also matter, but differently: they are not a separate cash distribution to chart investors; their effect shows up through per-share economics and the market price to the extent investors price them in.
The 2026 chapter: Tokio Marine
Berkshire widened its Japan exposure through a strategic stake in Tokio Marine Holdings via National Indemnity. Tokio Marine is Japan's largest listed property-and-casualty insurer, with growing US exposure through past acquisitions.
This fits Berkshire's broader pattern: it has long owned major insurance operations and uses insurance "float" — premiums collected before claims are paid — as a low-cost source of investment capital.
The question for new investors: is the rerating over? The Nikkei has crossed 60,000 and trading houses are well off their 2020 lows. But the gap to S&P 500 valuations is still substantial, and corporate governance reform in Japan is still in its early innings.
For educational purposes only. Not investment advice or a recommendation. Past performance does not indicate future results.