Berkshire CEO Greg Abel: Japan's Five Major Trading Companies Will Be Held for Decades
Berkshire Hathaway CEO Greg Abel stated in an interview with CNBC in Tokyo that the company views its holdings in Japan's five major trading companies as a long-term investment, expecting to hold them for decades. Currently, it holds over 10% stakes in Itochu, Marubeni, Mitsubishi Corporation, Mitsui & Co., and Sumitomo Corporation, and continues to explore collaborations in Japan and overseas.
He mentioned that despite Japan's 10-year government bond yield rising to around 3%, a multi-decade high, the trading companies do not see this as a fundamental challenge, and Berkshire still plans to issue yen-denominated bonds as needed. In March, it acquired approximately 2.49% of Tokio Marine through strategic cooperation. Regarding artificial intelligence, he noted that the rapid development and practical applications by its subsidiaries are among the reasons for his positive outlook on diversifying holdings in Alphabet. Mitsubishi recently increased its stake by about $10 billion, purchasing at a discount of approximately 6.5% to the stock price; by the end of Q2, it held about 106 million shares valued at approximately $37.8 billion, making it the third-largest common stock holding, after Apple and American Express. He has always believed that energy is a constraint on data center expansion, with about 8% of Berkshire Energy's load in Iowa coming from data centers, and is willing to supply large tech companies, provided it does not harm other customers and brings net benefits to the community. He views housing from a long-term perspective, stating that the American dream remains, although the short-term path is rocky and recovery will not be swift. Demand for most large businesses remained strong in Q2, but American consumers are being squeezed by inflation and mortgage rates, necessitating more cautious spending; he stated that the fundamentals he sees remain very strong.
Holding for decades is a statement, not a non-reduction contract. Increasing holdings in Alphabet and energy constraints are two sides of the same "AI needs power" logic. Yen bonds turn foreign exchange and interest rate differentials into financing tools.
He views the dividends and buybacks from trading companies as complementary to profit growth. The community net benefit clause limits the unlimited acceptance of data center loads.
In market mechanics, the buyer is Berkshire, which seeks to lock in Japan's industry and power, while the seller is the trading companies' circulation and yen bond investors. The driving force is the new CEO's tone-setting, which is a configuration event. Funds continue to stay in trading companies and Google's parent company, and are leaning towards power generation assets. The beneficiaries are the five major trading companies and Berkshire Energy, while those under pressure are the building materials cycle waiting for a rapid recovery in housing, and other industrial and commercial users competing for electricity with data centers.
Source: Public Information
ABAB AI Insight
Greg Abel's use of "decades" in Tokyo stamps the five major trading companies, turning Buffett's yen arbitrage into his first diplomatic move. The over 10% stake requires the other party's consent, indicating that this is an invited major shareholder rather than a barbarian at the gate. The 3% government bond yield is absorbed by the trading companies, allowing Berkshire to continue issuing yen bonds to buy Japanese assets, with the interest rate spread still being structural. The $10 billion increase in Alphabet, at a 6.5% discount, shows he is framing AI as a usable infrastructure company rather than a laboratory lottery. The 8% load in Iowa is already accounted for electricity, not just a planning diagram. The supply of electricity comes with the premise of "other customers and communities," meaning utility licenses take precedence over urgent orders from tech customers. The rocky housing market and consumer pressure, alongside his "strong fundamentals" statement, separate company performance from household budgets.
The capital path is yen liabilities plus trading company equity, plus U.S. tech stocks and regulated power plants. The motivation is to pile cash into assets that can survive cycles; the strategy is to buy both ends of AI: stocks of model companies and the electricity that model companies lack. The 2.49% stake in Tokio Marine extends the trading company logic into insurance. Buffett liked investing in Japan, and Abel is responsible for turning that preference into executable increases and bond issuance.
The analogy is Berkshire's decades-long holding of Coca-Cola and its long-termism after investing in BYD, as well as the nationwide competition among utility companies to take on data center loads. The phase is shifting from Buffett's personal preferences to Abel's infrastructure language.
This is capital concentration. Concentration occurs in groups that can simultaneously provide capital, patience, and electricity. The mechanism is: Japanese trading companies provide industrial cash flow, yen bonds provide cheap liabilities, and energy companies provide pricing power at the AI bottleneck. Whoever can sell electricity to data centers without harming residential electricity prices will participate in this round of capital expenditure rather than just observe stock prices.
ABAB News · Law of Cognition
- Holding for decades requires the other party to allow you to exceed 10%, and patience is also a result of negotiation.
- When artificial intelligence lacks electricity, power plants are more like contractable assets than laboratories.
- A strong company fundamental and tight household budget can both be true at the same time.