- Warren Buffett famously moves markets with his decisions, as other investors follow his lead.
- The “Buffett Effect” is likely behind his Berkshire Hathaway conglomerate scoring a 9% gain on its latest investments in just two days.
- Buffett’s company revealed on Sunday night that it has built 5% stakes worth a combined $6 billion in all five of Japan’s largest trading companies.
- Their stock prices soared on Monday and Tuesday, generating a $570 million gain for Berkshire.
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Warren Buffett is famous for moving markets when he makes a bet, as other investors trust his judgement and pile into whatever he’s bought. The “Buffett Effect” may have generated a $570 million gain for its namesake in just two days.
The famed investor’s Berkshire Hathaway conglomerate revealed on Sunday night that it has built 5% stakes in each of the five largest Japanese trading companies or “sogo shosha”: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo.
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Japanese regulatory filings confirm that National Indemnity, one of Berkshire’s insurance subsidiaries, owns between 5.0% and 5.06% of the five businesses. The positions were worth between $756 million (Sumitomo) and almost $2 billion (Itochu) as of Friday’s close.
News of Buffett’s backing sent the five companies’ stock prices up by an average of 9.6% over the course of Monday and Tuesday. The upshot is the combined value of Berkshire’s stakes has jumped from the yen equivalent of $6.3 billion to $6.9 billion — a 9%, or $570 million gain.
Buffett won’t be too excited about the immediate success, as he plans to maintain the five positions for a long time. However, the burst of enthusiasm suggests other investors also see value in the five stocks, validating his bet on them.