Buffett’s Last Sizeable Bet: Why Japan is Winning for Berkshire Hathaway
Warren Buffett may have stepped down as CEO of Berkshire Hathaway, but his investment legacy continues to unfold. A particularly astute move, made in 2020, is now yielding substantial returns: a significant investment in five major Japanese trading companies. What initially appeared as a contrarian play is now a $30 billion portfolio, generating a $24 billion profit in just five years.
The 2020 Japan Play: A Long-Term Vision
In 2020, Berkshire Hathaway acquired stakes of slightly more than 5% in each of five leading Japanese trading companies. This $6.25 billion investment signaled a long-term strategy, and Buffett subsequently increased those holdings in both 2023 and 2025. The timing was notable, as Japan’s stock market had experienced nearly three decades of stagnation following the asset market crash of 1989 – a period often referred to as the “lost decades.”
Buffett’s strategy wasn’t simply about identifying undervalued stocks. He too capitalized on favorable financial conditions, financing much of the investment with low-interest debt in Japanese yen. The interest rate on this debt was around 1%, while the trading companies provided dividends of approximately 4%, effectively covering the borrowing costs.
Policy Shifts Fueling Growth
Recent policy changes in Japan have significantly contributed to the success of Berkshire Hathaway’s investment. Corporate governance reforms and pro-growth government policies, particularly those benefiting technology companies, have spurred a surge in the Japanese stock market. Sanae Takaichi, Japan’s prime minister, has prioritized ending “excessive fiscal austerity,” a policy shift validated by her party’s recent landslide election victory.
However, Japan’s economic landscape isn’t without its challenges. The country experienced a technical recession in 2024 due to high inflation and weak domestic demand, and faces potential risks of further economic downturns. Concerns about a worsening debt crisis and the impact of stimulus measures on bond markets have also emerged.
International Markets Outperforming the U.S.
Despite these concerns, the success of Buffett’s Japan bet highlights a broader trend: the outperformance of international stock markets compared to the U.S. In 2025, overseas stock markets rose 28%, exceeding the S&P 500’s 16% gain. Japan’s Nikkei index, in particular, significantly outperformed the S&P 500, increasing by 38.6% over the past year.
Factors driving capital flows abroad include a softer dollar, trade tensions, and the concentration of the U.S. Market in a few large technology companies. While Berkshire Hathaway remains largely invested in U.S. Assets, its commitment to Japan suggests a willingness to diversify and capitalize on global opportunities.
What Does This Mean for Investors?
Buffett’s continued confidence in his Japan holdings, stating his intention to maintain these positions for 10 to 20 years, underscores the importance of long-term investing and identifying fundamentally sound companies. The situation also demonstrates the potential rewards of investing in markets undergoing structural reforms and benefiting from favorable policy changes.
Pro Tip
Don’t shy away from contrarian investments. Sometimes, the best opportunities lie in markets that are currently undervalued or overlooked by other investors.
FAQ
Q: What are sogo shosha companies?
A: These are large, diversified Japanese trading companies involved in a wide range of industries, including energy, electronics, and raw materials.
Q: Was Buffett’s investment in Japan risky?
A: Initially, yes. Japan’s economy had been stagnant for decades, but Buffett’s long-term perspective and favorable financing conditions mitigated the risk.
Q: Is Japan’s economy currently stable?
A: Japan has experienced recent economic challenges, including a technical recession, but policy changes are aimed at promoting growth.
Q: What is the “Sell America” trend?
A: This refers to a recent shift in investor sentiment, with some reducing their exposure to U.S. Assets in favor of international markets.
Q: How much has Berkshire Hathaway profited from its Japanese investments?
A: Approximately $24 billion in five years, with the portfolio now valued at over $30 billion.
Want to learn more about Berkshire Hathaway’s investment strategies? Explore our other articles on value investing.
