No. of Recommendations: 14
What is it that Buffet likes about these Japanese companies?
Interview with CEO of Mitsubishi Heavy Industries America ...
Just for the record, Berkshire is a shareholder of Mitsubishi Corp, which has almost nothing to do with Mitsubishi Heavy. At least not this century.
If I am not mistaken, neither one owns more than 1% of the other, and there is no common governance.
Indeed, Mitsubishi Corp is far more related to Berkshire than it is to Mitsubish Heavy : )
That doesn't mean that the Heavy CEO's comments aren't valuable and insightful, but his firm isn't a Berkshire investee.
As for what Mr Buffett likes about the Japanese trading firms, I think it mostly comes down to pretty simple
* They have been around for 150 years and make money almost every year, so they're pretty likely to make a lot of money in future, in a near-perpetual manner
* They were apparently pretty cheap when purchased
* They are big...it was a way to deploy a big chunk of capital at a price with a margin of safety
* They have dividends, giving more cash to head office to deploy rationally
At the fancy end of the spectrum:
* the money to invest was largely borrowed at near zero rates, in a way that also gave a currency hedge.
They tend to remain profitable measured in yen when there is a big drop in the yen, something not impossible.
* These firms do a lot of M&A. It's quite possible Berkshire might get some deal flow--opportunities to deploy yet more capital at good rates somewhere in the capital structure of some future deal.
Jim
