Buffett's Japan Play: Why Investors Shouldn't Sleep On These Stocks, ETFs

Warren Buffett gave Japan Inc. another stamp of approval and the market is eating it up. Shares of Japan's five largest trading houses surged up to 9% after the Oracle of Omaha signaled Berkshire Hathaway Inc. BRK BRK is eyeing bigger stakes.

Mitsubishi UFJ Financial Group Inc MUFG led the pack, climbing nearly 9%, while Mitsui & Co MITSY, Marubeni Corp MARUF MARUY, Sumitomo Mitsui Financial Group Inc SMFG and Itochu Corp ITOCF all jumped between 4% and 7.5%, reported the Financial Times.

Buffett’s Billion-Dollar Bet Gets Bigger

Buffett's love affair with Japan is nothing new. Back in 2020, Berkshire quietly snapped up 5% stakes in each of these trading giants, shelling out $6 billion. Fast forward to today and those holdings are worth $23.5 billion.

Related: Warren Buffett’s Berkshire Boosts Bets On 5 Japanese Companies: Oracle Of Omaha Says Admiration ‘Has Consistently Grown’

Now, with the 10% ownership cap lifted, Buffett's annual letter made it clear: "You will likely see Berkshire's ownership of all five increase somewhat."

Translation? Buffett's doubling down.

Why Trading Houses? Think Private Equity, Buffett Style

Why does he love these stocks?

Think of them as Japan's private equity powerhouses with portfolios spanning convenience stores, salmon farms, infrastructure and tech startups.

Jefferies analyst Thanh Ha Pham calls them “the private equity of Japan” but with a Buffett-approved long-term horizon.

ETFs, Stocks Riding The Buffett Wave

For ETF investors, Buffett's Japan bet shines a light on three key funds.

The iShares MSCI Japan ETF EWJ is up 2.64% year-to-date, while JPMorgan's BetaBuilders Japan ETF BBJP has climbed 2.37%. But the real standout?

The WisdomTree Japan Hedged Equity Fund DXJ, which boasts a 3.98% gain over the past year.

The Buffett effect is real and it's not just the trading houses riding the wave.

Sony SONY has soared 44% in the past year, while Sumitomo Mitsui Financial Group SMFG is up nearly 40%. Even Mitsubishi UFJ Financial Group MUFG has posted a stellar 24.6% annual gain.

With Japan's corporate reforms, rising dividends and Buffett's backing, this might just be the start of a long-term bull run.

For investors, ignoring Japan now could be like skipping Apple Inc AAPL in 2003 – a mistake Buffett himself vowed never to repeat.

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