Whatâs Going On Here?Warren Buffett's Berkshire Hathaway upped its stake in Japanâs five biggest trading houses, according to news out on Monday. What Does This Mean?Buffett sings the praises of American enterprise, but heâs not shy about looking further afield when things get pricey on home turf (tweet this). And lately the Far East seems to have caught his and Berkshire's eye with the firm pouring even more money into Japanâs mega trading firms, or âsogo shoshaâ, shortly after claiming a $5-billion chunk of Taiwanese chipmaker TSMC. And it looks like thereâs more to come: when Berkshire picked up its original 5% stake in each firm back in August 2020, it hinted that there was room to buy up to 9.99%. That might be why the sogo shoshasâ stock prices inched higher when the latest news broke. Why Should I Care?Zooming out: Read between the lines.
You might not have Warren Buffett on speed dial, but you can get a sense of what heâs thinking without a one-on-one catch up: Berkshireâs bulked-up stakes in the Japanese trading firms could tell us something about Buffettâs views on inflation. After all, these businesses make money by importing, trading, and investing in all sorts of commodities, from oil to metals and textiles â and the more those materials cost, the bigger the firmâs profit. Reading between the lines, then, this move suggests Buffett could be betting on raw materials getting more expensive down the line.
The bigger picture: Benjamin Buffett.
It looks like the Oracle of Omaha is having a Benjamin Button moment, switching back to his youthful investing style at the twilight of his career. Buffettâs been the poster boy for âquality investingâ for decades: thatâs a safe, stable investment strategy that focuses on buying great businesses at fair prices. But recent moves â like his big buys in Occidental Petroleum and TSMC â have seen Buffett wade into riskier, more volatile industries, in a throwback to his early âone-last-cigar-puffâ bargain-hunting days. | 