Warren Buffett's Berkshire: Selling U.S. Stocks? Here’s Where the Money Is Going Now

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On Monday, Warren Buffett’s company, Berkshire Hathaway, announced an increase in its holdings of shares in Japan’s top five trading firms. This development suggests that investors may want to consider looking for opportunities beyond the American stock market at this juncture.

Berkshire increased its stake in Itochu, Sumitomo, Marubeni, Mitsubishi, and Mitsui as revealed by regulatory documents on Monday, boosting its positions to fall within the range of 8.5% to 9.8%.

In July 2019, Buffett began purchasing shares in the five trading firms, and last month, the Oracle of Omaha stated in a letter to shareholders that Berkshire was expected to increase its stakes in these Japanese corporations.

Increasing its stake in Japan might indicate that Buffett sees potential for worthwhile investments outside of the U.S.

Over the last month, U.S. stocks have declined due to concerns that President Donald Trump’s tariffs might lead to an increase in inflation and hinder economic growth. However, these stocks remain relatively expensive; the benchmark S&P 500 is currently trading around 20 times expected earnings for the coming year. Meanwhile, the technology-focused Nasdaq Composite trades at approximately 25 times those projections, whereas Japan’s Nikkei 225 index sells for roughly 17 times estimated future profits, indicating it may be less costly compared to its counterparts in America.

There are positive signs for Japan’s economy as well. Despite expectations that the Bank of Japan will maintain current interest rates this week, forecasts suggest they plan to continue increasing lending costs throughout the year. Investors view this move as an indication that government officials believe their decades-long struggle against deflation may be coming to an end soon.

Paradoxically, the recent sell-off in the U.S. markets has increased the worth of Warren Buffet’s lifetime achievements as the value of Berkshire Hathaway stock has risen. This shift occurred because investors moved their funds from the technology sector towards more secure investments. Despite declines seen in components of his "Magnificent Seven" such as Nvidia and Tesla, Berkshire shares have surged by approximately 14%, pushing the firm’s overall market cap to around $1.1 trillion.

Send your message to George Glover george.glover@dowjones.com

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