“r.itemList.length” “this.config.text.ariaShown”
“This.config.text.ariaFermé”
By David Randall and Svea Herbst-Bayliss
NEW YORK (Reuters) – Berkshire Hathaway Inc’s $6.2 billion raid on Japan’s five largest trading houses may simply imply that billionaire Warren Buffett expects inflation and the fall of the US dollar to put the U.S. dollar’s hotter foreign stocks as the global economies of the coronavirus pandemic.
Berkshire said Sunday night, in the case of buffett’s 90th anniversary, that it had just over 5% of the shares of Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui
The trading houses, known as sogo shosha with their diversified lines of business, adding exploration of raw materials, fit the mythical investor’s taste for old stocks, which have lost favor with investors.
Berkshire investors said they welcomed Buffett’s bet, at a time when US stock market valuations were in the world.Hus They are at their point since the tech bubble of the 1990s, generated through giants such as Apple Inc and Amazon.com Inc.
“The inflation cocktail combines and Buffett is migrating its investment where it can create costs through inflation,” said Bill Smead, Smead Capital Management’s leading investment officer, who invests nearly 3% of its assets in Berkshire.”These are corporations that will generate more cash if the value of oil [or] any input increases.”
Gold prices, inflation-linked bonds and some commodities have risen since March, fearing that more than $9 trillion of global central banks’ stimulus measures to combat the pandemic may lead to higher inflation.
The Fed said last week that inflation would be slower if it exceeded its 2% target.
At the same time, weaker valuations and a continued fall in the US dollar, now close to a low of two years, can make Japan and other foreign markets more enthusiastic about U.S. investors, said Jim Paulsen, Leuthold Group’s leading investment strater.The expectations of a weaker dollar are the arguments of U.S. investors to hold foreign stocks if profits are increased through the strength of the currencies in which they are denominated.This resolution is consistent with Buffett’s preference for price shares.
“Warren is looking to broaden his horizons, but he stands firm in his price investment roots at a time when the US market is very expensive,” said Paul Lountzis, president of Lountzis Asset Management, who invests nearly a fifth of its berks assets.
Jamie Rosenwald, co-founder and senior Asia and Japan investment portfolio manager at Dalton Investments, said Buffett had made a smart deal “with ridiculously low stock market valuations” showing the “extraordinary values that are held in Japan today.”
Buffett, who at the annual Berkshire assembly in May said he was confident of America’s ability to persevere the pandemic, has already looked out of the country after buying corporations like IMC International Metalworking and the German motorcycle clothing store Detlev Louis.United States,” said James Armstrong, president of Henry H.Armstrong Associates, who invests a quarter of its berkshire assets.Lots of cakes at a spectacular price, it’s a winning combination.”
The commitment to Japanese corporations may simply be Berkshire’s position in the Chinese market, said Guy Spier, portfolio manager of Aquamarine Capital in Zurich, who said those corporations “have spent much more time figuring out how to deal with an emerging China than others.”
Charlie Munger, 96, Berkshire’s vice president, said in February that Chinese corporations are more powerful and develop faster than their American counterparts.Berkshire has invested in BYD Co, a Chinese electric car manufacturer, which will also help Berkshire reduce its money through $145.Billion.
“Berkshire has the biggest elegance challenge of having to put billions of dollars to work,” said Rosenwald of Dalton.
(This story corrects a typo in the title)
(Report through David Randall and Svea Herbst-Bayliss with additional reports through Jonathan Stempel; edited through Megan Davies and David Gregorio)