🎁ETFs to Follow 93-yr-old Warren Buffett to Increase Japan Invests？

🎁Do you have investments related to Japan Market？Is current a good timing to invests Japan market related opportunities？

$iShares MSCI Japan ETF(EWJ)$ $Aberdeen Japan Equity Fund, Inc.(JEQ)$ $WisdomTree Japan SmallCap Dividend Fund(DFJ)$ $WisdomTree Japan Hedged Equity Fund(DXJ)$

After 11 years, the 93-year-old Warren Buffet will visit Japan again, and said that he will continue to be optimistic about Japanese stocks and consider increasing his bets on Japan.

Buffett's investment in Japan is mainly reflected in two directions: stocks and the issuance of yen bonds.

1. Buffett continues to increase holdings of Japan's five major trading companies

In August 2020, $Berkshire Hathaway(BRK.B)$ $Berkshire Hathaway(BRK.A)$ Chairman Buffett invested approximately US$6.1 billion to establish positions in Japan's five major trading companies, including $Itochu Corp.(ITOCF)$ , $Mitsubishi UFJ(MUFG)$, $Sumitomo Mitsui(SMFG)$, and $Marubeni Corp.(MARUF)$ . He added about $2.4 billion to his holdings in November 2022, and those positions are now worth nearly $13 billion.

The recent 4 year performances of the 5 japan stocks of below：

Big Gains from Bloomberg

The holdings of $Berkshire Hathaway(BRK.B)$ in Japan's five stocks has risen to 7.4% from about 5% in 2020. These holdings became the Buffett company's largest investment outside the United States. And luckly, Buffett has made about $4.5 billion in profits from positions since 2020.

2.Buffett's yen bond investment returns are remarkable

It is worth to mention that besides the five major stocks, Buffett is willing to buy Japanese stocks:

"The next Japanese stock investment object is always on the mind, depending on the price."

As early as 2019, Berkshire Hathaway issued yen bonds for the first time in Japan, and with a bond issuance scale of up to 430 billion yen, it became one of the largest overseas issuers of yen bonds in history.

In 2020, Berkshire Hathaway issued 195.5 billion yen in bonds. In the recent two years, Buffett has remained quite active in the Japanese bond market. The latest issuance of benchmark yen bonds was in December 2022, with a scale of 115 billion yen.

As of 2022, the scale of yen-denominated notes and loans on $Berkshire Hathaway(BRK.B)$ 's books has increased to over $7.8 billion. In contrast, the scale of notes denominated in US dollars, euros, and British pounds is shrinking.

Source from Financial Times

3.Three reasons on why Buffett invests Japan positively against the market

1）Bufett： "I firmly believe that in 20 or 50 years, both Japan and the US will be stronger than they are now."

Buffett's main reason for investing in Japan is the desire to diversify his investments internationally. In its letter to shareholders issued in February 2023, it reveals its concerns about the unexpected tense.

Berkshire Hathaway holds a market value of $300 billion in listed stocks, most of which are U.S. stocks. 40% depend on $Apple(AAPL)$ 's stock. While Buffett believes in the growth potential of the United States, over-concentration of investments creates risks.

Buffett regards the fiscal imbalance in the United States as a problem, and lists financial chaos and global recession as business issues. Buffett also mentioned the importance of protecting shareholder assets as much as possible from runaway inflation.

  2）Japanese stocks are undervalued rarely seen in the world.

“If the stock was not underestimate, don't invest" is Buffett's investing philosophy.

Lorraine Tan, Morningstar's head of Asia equity research, said Buffett's is a reminder that attractive and affordable investment opportunities exist in Japan：

According to his preferences, he looks for companies that are well managed and enjoy what he considers an undervalued economic moat.

The low PBR (price-to-book ratio) of Japanese stocks was pointed out as a stock price indicator indicative of undervaluation. Lower than 1x indicates that the stock price is below the value that would be gained by dissolving the business.

More than 50% of listed companies in Japan are below 1 times, falling into an underestimation rarely seen in the world.

3）Recognize the quality on the company's operating quality

But underestimation is not the only determining factor. Buffett said, "I will pay attention to the business it is engaged in and observe how the business will develop."

So the third reason on why Buffett buys Japanese stocks may regarded to stocks quality. Buffett shared：

"Operators have made good judgment" and "we rate very highly the fact that more capital is being created for dividends and share repurchases of Japan companies".

Buffett has made his wealth through long-term investments in great businesses for like $Coca-Cola(KO)$. On the other hand, there are not a few cases where $IBM(IBM)$ gave up.

Regarding Japanese stocks, Buffett also pointed, "If you think there is a problem with the company‘s operation, you should not buy it."

Investments in Japanese stocks by experienced investors like Warren Buffett will also support the management of the company‘s business, accompanied by shareholders who strictly monitor operations according to world standards.

A triple win situation.

Monthly chart

🎁Questions for Tigers

Do you have investments related to Japan Market？(Every Valid comment by April 17th will receive 5 Tiger Coins）