13.5 billion, Buffett went to Japan to "sweep goods"

来源：融中财经（ID：thecapital） 作者：吕敬之

Warren Buffett, there is a new move.

Recently, Berkshire Hathaway raised about $1.9 billion in an unprecedented Japanese yen bond issuance, which is not only the company's largest yen bond issuance in the past five years, but also marks a further deepening of Buffett's ties with Japan's capital markets.

Warren Buffett's investment strategy reflects his consistent value investing philosophy, focusing on investing in companies with low valuations, high dividend yields, and stable growth. He took advantage of the Bank of Japan's ultra-loose monetary policy by issuing yen bonds to obtain funds at low cost and invest in high-dividend Japan stocks, thereby gaining interest rate differentials. In addition, the continued depreciation of the yen has also brought additional income to Buffett's investments, reducing the cost of debt servicing while increasing the value of the yen assets he invests in

As Japan's economy gradually emerges from deflation and ushers in an important inflection point, Buffett believes that Japan's economy will be stronger in the next 20 or 50 years, and the attractiveness of the Japan stock market, as well as the better "arbitrage" space relative to other markets, are also important factors to attract Buffett's investment.

The issuance of the largest amount of yen bonds, a new opportunity

This year, Japan's secondary market has shown abundant investment opportunities, mainly due to the recovery of the Japan economy and the growth of corporate earnings. As the Bank of Japan gradually withdraws its ultra-loose monetary policy, the yen is expected to appreciate significantly, which will have a positive impact on the return on investment of Japan assets. Specific sectors such as infrastructure and technology are favored as they are less affected by the recession and benefit from the acceleration of digital transformation.

In global trade, Japan's manufacturing sector continues to maintain its strengths, providing investors with the opportunity to invest in globally competitive Japan manufacturing companies. The bond market also offers diversification opportunities for investors looking for stable income, although the Japan central bank's monetary policy normalization could lead to higher bond yields.

As the aging population accelerates, there may be investment opportunities for innovative companies in the healthcare sector that are focused on solving the challenges posed by an aging population. Global investor interest in the Japan market has increased, and funds have flowed to the Japan stock market, especially against the backdrop of high economic and political uncertainty in the rest of the world. However, investors should also be aware of potential risks when considering these investment opportunities, including downside risks to the global economy, changes in the yen exchange rate, and uncertainties in Japan's domestic economic policies.

The tourism industry is recovering rapidly after the pandemic and is expected to contribute nearly 44.6 trillion yen to Japan's economy, or 7.5% of GDP. Spending by both international and domestic tourists has reached record highs, which has not only boosted the tourism boom, but also led to the growth of related industries such as hotels and B&Bs. At the same time, the real estate market is also showing strong growth momentum, and the sharp rise in new home prices in Tokyo heralds a full recovery of the market. In the financial sector, with the Bank of Japan likely to introduce negative interest rate policies, the appreciation of the yen is expected to drive growth in banking and insurance businesses, while the normalization of monetary policy is expected to improve the profitability of financial institutions.

The growth of domestic consumption is also impressive, and the economic stimulus measures of the Japan government have effectively promoted the improvement of the income environment and promoted the growth of personal consumption. The increase in household income and the release of excess savings are expected to further boost the consumer market. In the high-tech sector, investment in semiconductors and automation continues to rise, driven by corporate capex cycles and government financial support for key industries. In addition, innovative companies in the IT and technology sectors, especially artificial intelligence and robotics, are becoming one of the fastest-growing industries in Japan, and government support for startups in these fields provides favorable conditions for investment.

As Japan strives to achieve its carbon neutrality goal by 2050, the field of green technologies and products is also experiencing rapid development. Government support and the advancement of environmental policies have created huge investment opportunities in the sustainable technology and renewable energy markets. The strong performance of these industries has not only driven Japan's economic growth, but also provided abundant opportunities for domestic and foreign investors and entrepreneurs.

After the yen exchange rate became lower, it was not only netizens who went to Japan to buy and buy frantically, but also Warren Buffett.

Berkshire Hathaway, led by Warren Buffett, recently raised 281.8 billion yen (about $1.9 billion) through the issuance of yen bonds, the company's largest yen bond issuance in the past five years. This year, the company has issued yen bonds for the second time, after issuing 263.3 billion yen in April.

The issuance of yen bonds shows Buffett's further connection with Japan's capital markets. According to the filing by Berkshire Hathaway, the funds raised will be used for the company's general purposes. Analysts believe that this increases the company's investment opportunities in Japan assets.

Berkshire Hathaway's fundraising activity was closely watched by stock market investors as the company's purchase of shares in Japan's five largest trading companies earlier this year pushed the Nikkei 225 index to an all-time high. In its annual shareholder letter in February, Berkshire Hathaway mentioned that investing in Japan companies was largely funded through the issuance of yen bonds.

Takehiko Masuzawa, head of trading at Phillip Securities Japan, noted: "Berkshire Hathaway has issued the largest yen bonds this year in the company's history, which shows that they are optimistic about the rally in the Japan stock market. He added: "The market is speculating on their next investment target, and investors believe that value stocks that pay high dividends, such as banks and insurance companies, may be the most likely choice." ”

Berkshire Hathaway's JPY bonds cover maturities of 3 years, 5 years, 7 years, 10 years, 20 years, 28 years and 30 years. Among them, the issuance of three-year bonds was the largest, at 155.4 billion yen, while the issuance of five-year bonds was 58 billion yen.

Buffett chose to invest in the Japan capital market mainly because of the low valuation and high dividend characteristics of Japan's five major trading companies.

These companies offer higher dividend yields, while the share price is much lower than the book value at the time of investment. These trading companies have diversified businesses, covering energy, machinery, chemicals, food, finance and other fields, with strong cash flow and diversified income streams, and are able to maintain stable returns in different market environments.

Warren Buffett raised funds by issuing yen bonds, using the ultra-loose monetary policy of the Bank of Japan to obtain a large amount of yen at a low cost, and then invested in the Japan stock market, such a financing cost of only 0.5%, effectively eliminating currency risk. Buffett plans to hold these investments for the long term, which is expected to be held for 10 to 20 years, showing that he is optimistic about the long-term growth of Japan's economy. In addition, as Japan's economy gradually emerges from deflation and ushers in an important inflection point, Buffett believes that Japan's economy will be stronger in the next 20 or 50 years. Since Warren Buffett's investment in the five major trading companies, the stock prices and performance of these companies have performed well, bringing him rich returns. According to statistics, since 2020, Buffett has made an estimated $4.5 billion in gains in the positions of Japan trading companies. The attractiveness of the Japan stock market, as well as the better "arbitrage" space relative to other markets, is also an important factor in attracting Buffett's investment.

Buffett's success in investing in Japan's capital markets is due to his consistent value investing philosophy, focusing on investing in companies with low valuations, high dividend ratios, and stable growth. He has invested in five major trading companies in Japan with strong cash flow and diversified business models that enable them to maintain profitability and reduce investment risk under different market conditions. By issuing yen bonds, taking advantage of the Bank of Japan's ultra-loose monetary policy, we can obtain funds at low cost and invest in high-dividend Japan stocks, thereby obtaining interest rate differentials.

Warren Buffett's long-term holding strategy and diversification further enhance the stability and income potential of the portfolio. His investments are not limited to equities but also include other financial instruments such as bonds, and his focus on reshaping global value chains is also one of the key factors in the success of his investments in Japan, especially in high-tech industries such as semiconductors, where Japan has a clear advantage. The companies he invests in have prudent financial management, which helps to maintain stable returns in different market environments, while the huge amount of money retained is used both to build the business and, to a lesser extent, to buy back shares, which adds to the attractiveness of the investment.

Warren Buffett is also changing with the environment

As powerful as Warren Buffett, his investment philosophy has also been adjusted with changes in the market environment.

This year, Warren Buffett's investment strategy reflects his consistent investment philosophy, while also demonstrating adaptability to market changes.

Warren Buffett has increased his investment in the energy sector, particularly Occidental Petroleum, through Berkshire · Hathaway, showing his confidence in the energy sector, especially those companies that are investing in future technologies. Despite some adjustments in the financial sector, he has maintained significant investments, showing that he believes well-managed banks and financial services companies can provide stable long-term returns and dividends.

In tech stocks, Buffett reduced his stake in Apple by about half, a change that suggests he is reevaluating and rebalancing his portfolio, especially in high-performing tech stocks. At the same time, he has significantly increased Berkshire's cash reserves, indicating that he is cautious about future market opportunities while also preparing for a potential market downturn.

Warren Buffett continues to emphasize the importance of value investing, focusing on the company's fundamentals, effective management, and competitive advantage in the market. He advises investors to focus on companies with strong market positions, stable cash flows, and dividend growth history, and to maintain diversification. His investment strategy remains focused on long-term value creation rather than trading based on short-term market volatility.

In terms of risk management, Buffett manages risk by increasing his cash position, which shows that he is preparing for a possible market downturn while also retaining the ability to invest during a market downturn. Many of the core holdings in his portfolio are strong dividend payers, and he advises investors to consider incorporating stocks that pay steady dividends into their portfolios for stable income and potential long-term appreciation.

Warren Buffett said at the shareholders' meeting that he will adjust the direction of investment in a timely manner according to the economic situation and technological progress, which shows that he does not stick to the original investment philosophy, but is willing to change with the times. He remains true to his philosophy of value investing, looking for stocks that are undervalued by the market and investing based on the intrinsic value of the company. Overall, Warren Buffett's investment style in 2024 reflects his usual caution and insistence on value investing, while also demonstrating his adaptability to market changes and openness to new investment opportunities.

Warren Buffett's reduction in technology stocks reflects his sensitivity to market changes and strict risk management. At a time when technology stocks are performing strongly in 2023, Buffett chose to reduce his weight in Apple stock, which may reflect his prediction of market uncertainty. At the same time, the regulatory environment facing technology companies such as Apple is changing, especially in the European and American markets, and these changes may adversely affect the revenue and profits of services such as Apple, which is contrary to Buffett's investment logic.

Warren Buffett's reduction may also reflect his more cautious approach to the global macroeconomy. Against the backdrop of slowing economic growth and heightened market volatility, holding cash has become a relatively sound investment strategy.

Warren Buffett has shown some flexibility in his investment strategy. While he has always been known for his value investing, he also adjusts his portfolio when market conditions change. While reducing his holdings in tech stocks, Buffett may be looking for other more attractive investment opportunities with long-term growth potential. When it comes to emerging technologies, Buffett's cautious approach to emerging technologies is reflected in his cautious approach, despite the fact that he includes some AI-related stocks in his portfolio. He believes that while AI technology is important, it is too early to predict its long-term impact.

This time, Buffett sees the potential of Japan, and it is also worth continuing to pay attention to the benefits of increasing his position in Japan.

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