Warren Buffett was "deeply irritated" by opportunity in Japan
Last week it became known that star investor Warren Buffett's investment holding company Berkshire Hathaway had raised fresh money in the form of yen by issuing bonds.
Now Warren Buffett has confirmed that Berkshire Hathaway has increased its stake in the five Japanese trading companies Mitsubishi, Mitsui, Itochu, Marubeni and Sumitomo to 7.4% each and is considering further investments in Japan.
Buffett is currently in Tokyo for talks and gave an extensive interview to U.S. financial broadcaster CNBC on Wednesday. In the interview, Buffett also explained why he originally joined the Japanese trading houses in August 2020.
"I was deeply irritated by the fact that we were able to buy into these companies," Buffett said. The stocks had "an earnings yield of maybe 14% or something like that, but the dividends would go up."
The earnings yield is the inverse of the price-to-earnings (P/E) ratio, which is a more common metric. A high earnings yield corresponds to a low P/E ratio and vice versa. An earnings yield of 14%, as mentioned by Buffett, corresponds to a P/E ratio of about 7. So Buffett was mainly surprised by the fact that the shares of Japanese trading houses could be had so cheaply. Despite interim price gains, the shares are also currently trading at very favorable fundamental valuations.
Buffett emphasized in the interview that these were great companies "that I generally understood what they were doing." He also said the Japanese trading houses were comparable to Berkshire in that they owned many different holdings. "And they were sold at what I think was a ridiculous price, especially compared to the prevailing interest rates at the time."
The Mitsubishi, Mitsui, Itochu, Marubeni and Sumitomo groups are large trading houses that deal in raw materials, intermediate products, finished goods and services, among other things. In Japan, these corporations are also known as Sōgō Shōsha.
Only copy paste but interesting
Source Stock3 : https://stock3.com/news/warren-buffett-war-zutiefst-irritiert-ueber-chance-in-japan-12191603
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