But their dependence on importing energy is obviously famous. I think this is a very smart play on higher commodities, not necessarily fossil fuels. This is obviously supportive for not only the trading houses but stocks and countries that are asset-rich, resource rich. So I really think this is more a play on these yields are going higher in Japan. Marginally, the dollar is devaluing relative to rest of world currencies as it relates to commodities. So, you know, Druckenmiller has his dollar short thesis. I just think this is a very strong bet on commodities. SAMANTHA LADUC: Well, I'm not quite sure that this is a longer term bet on the demise of fossil fuels. So, when you look at the energy play that Berkshire already has, what should we make of this? But some of them also represent a pivot away from fossil fuels. And to that point, I mean, these are also- these five trading houses, they all have price to earnings ratios of below 10. It also indicates that Japanese yields are likely to start to rise. And that's been a mantra of mine since summer of 2020. So, why does this matter? First, I think it's very important that it shows this investment in things over paper. I mean, he's usually kind of a bottom up fundamental approach to investing. Again, a lot of commodity based value shopping right there.Īnd it's clear that Buffett is ahead of the game because he not only sold Berkshire bonds in yen, which yielded very nicely for him, but he bought interest in these commodities, in these trading companies, which have been increased to about 7 and 1/2% holding. They are very much instrumental to everything that goes on in Japan from their distribution of consumer to industrials. And again, I think they will do it again.īerkshire went in 2020, August of 2020, took a 5% stake in these holdings, mega conglomerates in Japan, where these are basically trading houses. So, in the backdrop of Japan having the lowest yields in the world right now is one of the benefits, if you will, of going over where- Buffett has already proven this- went in before they widened their yield curve. It is the last bastion of low yields in this global world of hiking regimes. Second of all, it has some very interesting characteristics. It's a key player with the United States in supporting our equity and bond markets first and foremost. And since they have done their yen interventions back in September 22 when the gilt market, by the way, imploded and also throughout mid-October into December, widening their yield curve control, they have very much put a bottom in equities.Īnd this has basically this yen intervention en masse with central bank coordinated liquidity infusion. They are the largest buyers of US treasuries they also are a very large importer of NAT gas. SAMANTHA LADUC: Well, first, Japan in general is very important. Talk about this move, and why do you think he's making this move at this point? So, these trading firms that are Berkshire Hathaway investing in, the five largest trading houses in Japan, really represent companies that are integral to the economy. Good to have you back on the show, Samantha. Joining me now is Samantha LaDuc, LaDucTrading founder.
We're diving deeper into Buffett's overseas venture ahead of Berkshire's annual shareholder meeting coming up this weekend. Warren Buffett's latest bet is paying off, the billionaire investor seeing big gains from his stakes in five Japanese trading companies. LaDucTrading Founder Samantha LaDuc joins Yahoo Finance Live to discuss why Warren Buffett is betting big on Japanese companies, Japanese firms easing resilience on fossil fuel investments, and the outlook for the investment landscape in the U.S.
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