and is issuing Yen denominated bonds:
https://www.sec.gov/Archives/edgar/data/1067983/000119312522289445/d372820d424b5.htm
5 Likes
Not sure I clearly understand what a ‘trading house’ is. Is there an equivalent in the US economy that might help me understand?
Thx.
3 Likes
No exact equivalent. They are more common in Japan and some other Asian countries. The Swedish company Investor AB is similar.
You can think of them as conglomerates with diverse manufacturing, services and trading subsidiaries. Not too different from Berkshire without the huge insurance business.
3 Likes
4 Likes
https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1123&context=njilb
Interesting academic article on the trading companies.
Page 7-14 cover the role of sogoshosha in Japan - circa 1980s (this is an old paper).
Page 15-21 cover the history of the sogoshosha
2 Likes
Is our current valuation of our ownership of these now in the $11-12B range? Thanks.
Investor does not do any trading, as far as I know.
Yes, the current US Dollar market value of the 5 holdings is almost exactly $11 Billion today, but that doesn’t capture the entire picture since a material portion of the gains are reflected in the “currency hedge” portion of the trade, where Berkshire has borrowed the funds to make these investments in JPY which has declined against the USD. There is also a significant positive carry on the difference between the dividend yields these companies are paying and the almost-zero interest Berkshire is paying on the JPY bonds. It was a good trade and these companies are still inexpensive and likely to continue higher. Warren still knows what he is doing. Phew
5 Likes
Last time when Buffett bought the Japanese stocks, he simultaneously sold bonds denominated in Japanese yen, and the stock dividend rates were much higher than the bond interest rates. Last quarter, BRK booked a few hundreds millions USD gain on the reduced liability of bonds denominated in foreign currencies. I wonder if he would sell more Japanese bonds to cover the new purchase.
2 Likes
Final pricing on Berkshire’s Yen bond issue. 3 year through 30 year. Heaviest in 3’s and 5’s.
https://www.sec.gov/Archives/edgar/data/1067983/000119312522295825/d429190dfwp.htm
(it is only around $843 million USD worth in total)
5 Likes