Greg Abel confirms stake over 10% in the Trading Houses
Abel confirmed that Berkshire now owns more than 10 percent of all five of Japan's major sogo shosha, the trading conglomerates Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo.
This is not a new announcement so much as a confirmation of something that had already happened. Sumitomo and Marubeni crossed the 10 percent threshold back in May, joining Mitsubishi, Mitsui, and Itochu, which had inched past that level over the prior year. What made this week newsworthy is that Abel used the interview to explain, on camera, how Berkshire got there and why it still feels comfortable holding stakes it once promised never to exceed.
When Buffett first built these positions in 2019 and 2020, he told the five companies he would keep Berkshire's ownership below 10 percent without their permission, a courtesy gesture meant to signal that this was a passive, friendly investment rather than the opening move of an activist campaign. As the stakes crept toward that ceiling, the companies agreed to relax it, and Buffett told shareholders in his final letters as chief executive that ownership would likely keep rising. Abel has now finished what Buffett started, and he has been explicit that Berkshire intends to hold these positions for decades, language that echoes Buffett's own description of a fifty year or forever time horizon.
The Bond Market Backdrop
The timing is what makes this interesting. Abel gave his interview during a week in which Japan's 10 year government bond yield broke above 3 percent for the first time since 1996, and the 20 and 30 year points on the curve pushed to their own multi decade highs. Japan has spent most of the last three decades near zero interest rates, and a government debt load that now exceeds 200 percent of GDP was built on the assumption that borrowing would stay cheap indefinitely.
Several forces are colliding to push yields higher at once. Prime Minister Sanae Takaichi has pursued an investment led growth agenda centered on semiconductors and AI, financed in part through the largest initial budget request in the country's history, which naturally worries bond investors about supply and fiscal discipline. The Bank of Japan, under Governor Kazuo Ueda, is under pressure both domestically and from Washington, where Treasury Secretary Scott Bessent has publicly urged faster rate hikes to support a weakening yen, to keep tightening after ending its ultra loose policy regime. And layered on top of all of that is a global oil shock that has kept inflation expectations elevated worldwide, which is its own story worth unpacking.
Asked directly whether this bond market turbulence threatens the trading houses, Abel said no, not right now. He also said Berkshire intends to keep issuing yen denominated debt when it makes sense, even at these higher rates. That answer deserves more scrutiny than a simple yes or no, because there are genuinely two ways to read what rising yields mean for this trade, and reasonable people land in different places.
Two Ways to Read Rising Yields
The bearish reading is straightforward finance theory. A higher risk free rate raises the discount rate applied to future cash flows, which mechanically compresses the fair value of any equity, all else being equal. If Japanese yields are resetting permanently higher after three decades near zero, then Japanese equities broadly, including the trading houses, arguably deserve lower multiples than they carried in the ultra low rate era, regardless of how well the underlying businesses are performing.
There is also a more specific wrinkle for Berkshire itself. Part of the elegance of this trade, as Buffett explained it in his letters, was funding the purchases with yen denominated bonds, so that the dividends collected from the trading houses would exceed the interest paid on the debt. Berkshire expected roughly 812 million dollars in dividend income from the five positions in 2025 against yen borrowing costs of around 135 million dollars, a spread that made the whole structure close to a free lunch. As new yen issuance gets more expensive, that spread narrows for any fresh debt Berkshire raises, even though the existing stock of bonds is fixed rate and unaffected. Abel's comment that Berkshire will keep issuing yen debt anyway suggests he still sees room in that math, but the room is smaller than it was two years ago.
The bullish reading points somewhere else entirely, toward the trading houses' own balance sheets and business mix. These are not financial companies whose profits come from lending at a spread, so a higher policy rate does not directly boost their earnings the way it would for a bank. But rising yields in this particular episode are arriving alongside rising inflation, and rising inflation, especially inflation driven by energy and commodity prices, tends to flow straight through to the resource and energy segments that make up a large share of each company's profit. Mitsubishi's natural gas division alone accounts for roughly 30 percent of its earnings, spanning projects in Brunei, Indonesia, Western Australia, a recently added position in US shale gas, and a long standing stake in Sakhalin. Mitsui has been pursuing an additional stake in Qatar's North Field LNG expansion. When energy prices spike, these are not passive bystanders paying more at the pump. They are, in part, owners of the wells and the export terminals.
Abel's calm answer probably reflects both realities holding at once. The discount rate headwind is real but has to be weighed against genuinely stronger cash generation in the resource segments, and against valuations that started from a low base. Mitsubishi still trades around ten times forward earnings even after a blowout quarter, and all five companies have been returning enormous amounts of capital through buybacks and rising dividends, which cushions the impact of multiple compression on total shareholder return even if the price to earnings ratio itself drifts lower.
The Oil Shock Nobody Can Ignore
This brings us to the piece of the puzzle that ties the bond story and the trading house story together: the war between Iran and the US Israel coalition that began in late February and effectively closed the Strait of Hormuz for most of the year. This is not a hypothetical risk anymore. Roughly a fifth of the world's oil and a similar share of global LNG normally pass through that strait, and for months now transit volumes have run at a small fraction of normal levels, with tankers rerouting, insurance markets pricing in war risk premiums, and periodic strikes on tankers and refineries keeping the situation unresolved even as of early September. Brent crude spiked above 120 dollars a barrel in March before settling into a still elevated range in the high eighties and low nineties, and Asian LNG buyers have absorbed some of the sharpest price increases anywhere.
Japan imports nearly all of its oil and a majority of its LNG, so on the surface this reads as an unambiguous headwind for the country, and it is, for households, for utilities buying spot cargoes, for any importer without long term contracts or upstream equity. The instinct to assume it must therefore be bad for Japan's largest trading houses is understandable. But it gets the direction wrong for a meaningful slice of their business. These companies are not pure importers. They are equity holders in upstream production, LNG liquefaction trains, and pipeline and shipping infrastructure scattered across Australia, the Middle East, North America, and Russia. When the price of the commodity they partly own goes up, that shows up as profit, not cost, on that portion of the balance sheet. Mitsubishi's most recent quarterly results, covering the first full quarter inside the crisis, showed a sharp earnings surge that analysts tied directly to strength in its energy and resource businesses.
None of this erases the headwind case entirely. The trading houses also run large domestic consumer, food, machinery, and chemicals businesses that face higher input costs and a weaker yen, and a Bank of Japan forced into faster rate hikes to defend the currency could slow the broader economy these divisions depend on. The honest answer is that these companies sit on both sides of the oil shock at once, and which side dominates in any given quarter depends on the mix of contracts, hedges, and project stakes that outsiders can only partially observe from the outside.
Where Precious Metals and Rare Earths Fit In
Berkshire itself has always been famously skeptical of bullion as an investment, and that skepticism has not changed under Abel. Where the sogo shosha do have a genuine and growing role is in critical minerals and rare earth supply chains, an area that has become geopolitically charged as governments in Washington, Tokyo, and Canberra try to build alternatives to Chinese processing dominance. Marubeni recently took an equity position in an Australian mineral sands project that produces monazite, a key feedstock for rare earth oxides, alongside a Japanese metals refiner, and it is one of several such moves across the group aimed at securing offtake rights in stable jurisdictions. This is less a bet on the price of any single metal and more a bet on trading houses doing what they have always done, sitting in the middle of long, complicated physical supply chains and taking a cut for making the logistics work. It is a smaller piece of the earnings mix than energy today, but it is growing, and it is arguably a cleaner example of the sogo shosha business model than the more commoditized energy trade.
The Honest Takeaway
Berkshire's move past the 10 percent threshold in all five trading houses, its continued willingness to borrow in yen even as those borrowing costs rise, and Abel's calm public posture during a genuinely turbulent week for Japanese bonds and global energy markets, all point to a company that has run the numbers on both the discount rate risk and the commodity upside and concluded the position still works. Whether that conclusion holds depends on questions nobody can answer with certainty yet: how long the Hormuz disruption persists, how aggressively the Bank of Japan has to tighten, and whether Takaichi's fiscal agenda stabilizes or further unsettles the bond market. What can be said with more confidence is that framing this purely as a story about Japan being an oil dependent economy getting squeezed misses half the picture. The same companies exposed to that squeeze also own a piece of the barrel.
This article reflects publicly reported information as of early September 2026. It is intended as an explainer, not investment advice, and readers should do their own research or consult a licensed financial advisor before making investment decisions.
