Mitsubishi
Company Overview
Mitsubishi Corporation is Japan's largest general trading company by revenue, with operations spanning natural resources, chemicals, industrial infrastructure, automotive, food, consumer, and healthcare businesses worldwide. Berkshire's approximately 7-9% stake in Mitsubishi is part of the 2020 five-company Japanese trading company investment.
Investment Story
Part of the 2020 Japanese investment. Mitsubishi was included in Berkshire's five-company investment alongside Itochu, Mitsui, Marubeni, and Sumitomo. The investment was approximately $1.25 billion initially, subsequently increased to roughly $1.8-2.5 billion as Berkshire raised its stake toward 8-9%.
Mitsubishi's distinctive characteristics. Among the five trading companies, Mitsubishi has the largest revenues and the most prominent natural resources exposure — particularly LNG (liquefied natural gas), thermal coal, and copper. Its stake in various energy projects across Australia, Brunei, and other regions makes it a significant participant in the global energy supply chain.
The long-term relationship. Buffett has indicated that Berkshire considers these Japanese stakes long-term investments comparable to its major equity portfolio positions — permanent or near-permanent holdings that compound through dividend reinvestment and business growth rather than trading positions.
Buffett's Own Words
Mitsubishi Corporation . . . . . . . . . . . . . . . . . . . . . . . . 5.5 2,102 2,593 93,776,200 Mitsui & Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 1,621 2,219 24,669,778 Moody’s Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 13.3 9,636 143,456,055 U.S. Bancorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7 5,384 8,058 158,824,575 Verizon Communications Inc. . . . . . . . . . . . . . . . . . . 3.8 9,387 8,253 Others** . . . . . . . . . . . . . . . . *
In certain important ways, all five companies – Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo – follow shareholder-friendly policies that are much superior to those customarily practiced in the U.S. Since we began our Japanese purchases, each of the five has reduced the number of its outstanding shares at attractive prices. Meanwhile, the managements of all five companies have been far less aggressive about their own compensation than is typical in the United States. Note as well that each of the five is apply
*Berkshire itself. The five are (alphabetically) ITOCHU, Marubeni, Mitsubishi, Mitsui and Sumitomo. Each of these large enterprises, in turn, owns interests in a vast array of businesses, many based in Japan but others that operate throughout the world. Berkshire made its first purchases involving the five in July 2019. We simply looked at their financial records and were amazed at the low prices of their stocks. As the years have passed, our admiration for these companies has consistently grown. Greg has met many *
Investment Lessons
Long-term dividend compounding in undervalued businesses creates substantial wealth. The Japanese trading companies' 3-5% dividend yields on undervalued assets — combined with ongoing business growth in their underlying asset portfolios — creates a compounding mechanism that makes time a genuine ally. Berkshire's commitment to holding these positions long-term is the correct response to assets that appear to need time rather than catalysts to realize their intrinsic value.