Billionaire Warren Buffett’s stamp of approval is helping Japan’s Mitsubishi shed investor wariness about its complex global business that covers everything from sausages to natural gas. The country’s largest trading house, which operates in 90 countries and regions, has seen heightened interest from potential investors since Buffett’s Berkshire Hathaway (BRKa.N) took a stake in 2020, which later increased. Mitsubishi’s shares have more than tripled, factoring in dividends, while the Nikkei index has climbed 29%.
A top executive at the conglomerate said Mitsubishi has stepped up efforts to communicate its growth story to investors as it looks to take advantage of the heightened investor interest in the trading houses. Kenji Kobayashi, the company’s chief stakeholder engagement officer, said Mitsubishi is wooing foreign investors who the prospect of an emerging market giant with a broad global reach has drawn. He said Mitsubishi has already met with about 100 foreign investors in the past half year. That is about double the number it met with in the same period last year.
The increased engagement reflects the growing recognition by Japanese companies that they must engage more with external stakeholders, including shareholders, to compete effectively in the world economy. Japan’s larger companies have been undergoing a sea change in their attitudes toward shareholder activism as they try to boost their stock prices and improve their corporate governance.
The change in attitude has impacted some of the country’s biggest trading companies, which have long been disliked for having their fingers in too many pies, buying assets at peak valuations, and needing to be more transparent about their operations.
Mitsubishi, also known for its convenience store chain Lawson, focuses on its core trading businesses while shedding those that do not generate high margins or growth prospects. It has sold its banking unit and some of its steel and coal subsidiaries. The move has allowed Mitsubishi to focus on areas it sees as more profitable, such as its energy business, where it is developing newer technologies, such as offshore wind and next-generation energy, including hydrogen and solar power.
The increased investment by Berkshire, which also holds significant stakes in the BNSF railroad, several big utilities, and Geico insurance, has helped to turn around the fortunes of Mitsubishi and its rivals. Analysts have been rushing to raise their target prices for the trading houses, driving shares of Mitsubishi, Marubeni Corp, Mitsui & Co, and Sumitomo Corp higher. They have gained an average of 12.3% since Buffett’s wagers were first disclosed in August. The broader Topix wholesale trade index rose 2.7%.
