Through a big play in Japan, Warren Buffett is now one of the world’s biggest seafood investors
On 31 August, Berkshire Hathaway announced it had acquired slightly more than a five percent stake in each of the five major Japanese general trading companies: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo – all based in Tokyo – through regular purchases on the Tokyo Stock Exchange.
Collectively, the investments have a combined value of USD 6.7 billion (EUR 5.6 billion)
Berkshire Hathaway’s CEO, Warren Buffett, considered one of the most successful investors in the world, further announced that he was open to accumulating a larger share, up to 9.9 percent of each company, all of which have been moving deeper into the seafood business.
"I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment," Buffett said in a statement. "I hope that in the future there may be opportunities of mutual benefit."
Here’s a list of the five sogo shosha (Japanese general trading houses) Buffett invested in, and the extent of their seafood holdings:
Itochu subsidiary Showa Co., Ltd. is a food distributor operating domestically. The company has within its own corporate group several companies dealing in seafood: Show Fisheries Co. Ltd; Tasuke Co., Ltd.; Joy Foods Co.; Tenryu Fisheries Co., Ltd.; Showa Refrigeration Co., Ltd.; and BEC Corp.
Showa Fisheries, based in Ehime, operates offshore bottom trawlers based in Yawatahama and Shimonoseki ports. Tasuke, based in Nagoya, sells dried, salted and pickled fish, including spicy cod roe and fish marinated in sake lees. Joy Foods, based in Inuyama City, Aichi Prefecture also processes dried and salted fish, such as arabesque greenling, salmon, and juvenile sardines. Tenryu Fisheries is a wholesale fish vendor at the Hamamatsu City Central Wholesale Market. Showa Refrigeration operates cold storage facilities. BEC Corp. operates restaurants, including sushi chain Hakodate Ichiba, as well as consulting and construction businesses.
Marubeni has a strong presence in the seafood industry. It handles 10 percent of wild red (sockeye) salmon globally through its subsidiary, North Pacific Seafoods. Additionally, through its U.S. sales company, Eastern Fish Company, it has a 6 percent share of the shrimp wholesale market in the U.S. Benirei Corporation, a Tokyo-based domestic seafood importer and distributor with its own logistics capabilities, is also a Marubeni subsidiary. Marubeni and Japanese seafood company Nissui also announced that they will jointly acquire 66.7 percent of the shares of land-based recirculating aquaculture system (RAS) salmon farmer Danish Salmon earlier this year.
Mitsubishi Corporation operates 10 business groups with over 1,400 subsidiaries and affiliates. All of Mitsubishi’s seafood activities are in its food industry group. The largest of its seafood subsidiaries are Norway-based salmon farming company Cermaq, which it bought from the Norwegian government in 2014; British tuna processor Princes Group; and Japanese seafood wholesaler and refrigeration company Toyo Reizo.
Mitsui & Co., Ltd. operates its seafood trading through subsidiary Toho Bussan, which also handles other foodstuffs such as rice and soybeans. It has two seafood divisions. The first procures marine products mainly from Southeast Asia. The company has moved to acquire a 35.1 percent share of Minh Phu Seafood Joint Stock Company, the world's biggest integrated shrimp producer, which owns two processing plants and shrimp farms covering 900 hectares in southern Vietnam. Minh Phu Seafood has vertically integrated all stages from shrimp farming through processing to sales. Mitsui & Co. also sources shrimp from Indonesia. They import and sell various types of frozen shrimp from two factories of Indonesian partner company Pt. Misaja Mitra.
The second division has teams for farmed salmon and for tuna, the “Hokai Seafoods Team,” and the retail MD team. The salmon team mainly handles salmon cultivated in Chile and Norway. The company acquired 23.37 percent of Chilean integrated salmon farming and processing company Salmones Multiexport in 2015. The tuna team purchases tuna from the Mediterranean Sea (including that raised by tuna ranching) and the Atlantic and ships it to Japan. The Hokkai Sea Foods Team sends engineers to various parts of the world to advise on processing. They deal in processed salmon, trout roe products, and dried salted sockeye salmon. The retail MD Team proposes merchandising ideas and builds sales floors and displays featuring black tiger shrimp, processed products, and Hokkaido products such as salmon and snow crab.
In 2018, Mitsui & Co. took a stake in New York City, New York, U.S.A.-based Mark Foods, an importer and distributor of premium seafood, mainly wild-caught. Mark Foods is a leading importer of Patagonian toothfish to the U.S.
Sumitomo Corp. may have the least seafood holdings among the major trading companies, but in May, through its U.S. subsidiary Sumitomo Corporation of Americas, it invested in BlueNalu, a San Diego, California, U.S.A.-based company researching the growth of seafood cells in a laboratory for use in food products.
According to Buffett’s public statement, he appears to view the Japanese companies as not just investments, but also potential partners for Berkshire's subsidiaries, highlighting the five firms’ numerous joint ventures around the world. Additionally, Bloomberg reported that Buffett views Japanese companies as using honest accounting procedures. A strengthening yen and weakening dollar were also named by Reuters as primary reasons for the investment.
“Warren is trying to expand his horizon but stick to his value investing roots at a time the U.S. market is very expensive," Berkshire Hathaway investor Lountzis Asset Management President Paul Lountzis told Reuters.
According to the Financial Times, except for Itochu, the remaining companies Buffett invested in have assets collectively valued higher than their stock market valuation.
But Jason Ollison, principal of Asialantic Global Advisors and a former senior director at Sumitomo, warned Buffett may be disappointed in his investment, saying the complicated deal-making of each of the trading houses makes it difficult to track their diverse and ever-changing holdings.
“Warren Buffett’s mantra is that the companies he invests in should be simple, transparent, and well-run. The trading houses are challenged when it comes to operating in that manner,” Ollison said.
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