Greg Abel, Chief Executive Officer of Berkshire Hathaway, has made his inaugural trip to Tokyo since stepping into the role in January, using the visit to reaffirm the conglomerate's steadfast commitment to five Japanese trading houses. In a local interview, he described the stakes in Mitsubishi Corp, Itochu Corp, Mitsui & Co, Sumitomo Corp, and Marubeni Corp as a genuine long-term investment, stating, "We intend to hold for decades." This marks the first full year in the post-Buffett era, setting a definitive tone for Berkshire's most scrutinized overseas positions.

Abel disclosed that before departing Omaha, he discussed the investment with a now 96-year-old Warren Buffett, and upon arriving in Japan, he briefed him on the meetings. He noted that Buffett remains very fond of these Japanese assets, lending a sense of continuity to the strategy.

From 5% to Over 10%: A Stake Still Growing

The journey into the five trading houses began roughly six years ago, around Buffett's 90th birthday, when Berkshire initially revealed stakes exceeding 5% in each, pledging not to exceed 10%. Since then, each company has permitted Berkshire to cross that threshold, with current holdings now surpassing 10%. Abel's core message during this Tokyo visit is that this ceiling is not a final destination, nor is the relationship purely financial. He anticipates that underlying earnings at these firms will continue to advance and sees room for enhanced dividends and buybacks. More notably, he is considering raising stakes further and expanding joint investments and mergers and acquisitions on a global scale. While this ambition does not conflict with the 'hold forever' stance, increasing positions requires mutual consent and joint deals necessitate case-by-case approvals, Berkshire is clearly aiming to shift its role from a significant shareholder to a partner capable of executing overseas projects together.

Yields at 30-Year Highs, But Not a Fundamental Challenge

This week, Japan's 10-year government bond yield climbed to a roughly 30-year high, just above 3 percent, while its U.S. counterpart crossed 4.8 percent on Tuesday, nearing a three-year peak. For a company that significantly relies on yen-denominated debt to fund its Japanese assets, this could be a sensitive juncture. Yet Abel's tone remained composed, asserting that none of the trading houses view the environment as an immediate fundamental hurdle, adding that on a relative basis, they remain quite benign. With over 15 billion U.S. dollars in outstanding yen bonds reported in its latest quarterly filing, Abel affirmed that issuing debt in Japan remains an appropriate strategy, suggesting that while financing costs have risen, the overall logic of the investment remains intact. The trading houses themselves treat current rates as manageable operating conditions rather than an urgent threat.

Tokio Marine Becomes a New Pillar, Joint Projects Still in Discussion

In March, Berkshire announced a strategic investment in Tokio Marine Holdings, acquiring a 2.49% stake with intentions for global investment and M&A collaboration. Abel called Tokio Marine an excellent partner but stopped short of confirming financial backing for any potential takeover. As for joint ventures with the five trading houses, he only indicated that conversations are ongoing, declining to name specific targets. This cautious approach fits Abel's style: establishing the relational framework first, then waiting for the right deal to emerge. With the five-year-old 10% cap now lifted, yen liabilities still being issued, and the only verifiable hard data being the periodic disclosures of major shareholders from the trading houses and the yen debt balance in Berkshire's quarterly reports, Abel's visit has nudged the relationship forward, though contracts have yet to be signed.