Core Viewpoint - Warren Buffett is deepening his investment in Japanese trading companies by increasing his stake in Mitsui & Co. to over 10%, marking him as a "major shareholder" [3][6]. Investment Strategy Shift - This increase in stake signifies a subtle shift in Berkshire Hathaway's investment strategy, as Buffett initially planned to keep holdings in these companies below 10% [6]. - The Japanese trading companies have agreed to "moderately" relax the holding limit, allowing Berkshire to surpass the 10% threshold and engage more deeply in their future developments [6]. Market Reaction - Following the announcement, Mitsui & Co.'s stock price rose by 2.2% before settling at a 1.75% increase, with other major trading companies also experiencing stock price increases [3][6]. Unique Business Value - Buffett's continued investment highlights the unique business value of Japanese trading companies, which have a highly diversified business structure, providing resilience during commodity price fluctuations [6]. - These companies have also focused more on shareholder returns, enhancing their attractiveness as investment opportunities [6].

Core Insights - ITOCHU Corp. has seen a return of over 17% in US ADRs since May, outperforming the general Japanese market [1] Group 1: Company Performance - The return of over 17% is considered a respectable result for ITOCHU Corp. [1] - The performance of ITOCHU Corp. is better than the overall performance of the Japanese market during the same period [1] Group 2: Investment Strategy - The investment strategy focuses on long-term holdings unless there is a compelling reason to sell [1] - The approach aims to maximize total return over time by purchasing when prices are low relative to intrinsic value [1]

Group 1 - Warren Buffett is passing the CEO position of Berkshire Hathaway to Greg Abel in January 2026, who currently leads Berkshire Hathaway Energy and serves as vice chair of non-insurance operations [1] - Abel has expressed interest in increasing Berkshire's stake in five Japanese trading companies by 5x [2] - The five Japanese companies of interest are Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo, all of which are soga shosha, or trading houses, operating across multiple industries [4][5] Group 2 - These Japanese companies offer attractive dividends, with all except Itochu having yields over 3%, while Itochu's yield is 2.2% [5] - The market capitalizations of these companies vary, with Mitsubishi being the largest at approximately $80 billion, followed by Itochu at $74 billion, Mitsui at $60 billion, and Marubeni and Sumitomo at around $31 billion to $32 billion [6] - Buffett and Abel were drawn to these stocks due to their attractive valuations, with Buffett noting they traded at "ridiculously low prices" [8] Group 3 - Abel envisions holding positions in these companies "for 50 years or forever" and would prefer to increase Berkshire's investment from $20 billion to $100 billion [9] - Berkshire Hathaway has limitations on increasing its stakes in these Japanese stocks, initially agreeing to keep holdings below 10% of each company's outstanding shares, although this ceiling has been moderately increased [10] - Other investors can still consider these stocks as good picks due to their attractive valuations, with Sumitomo having a trailing-12-month price-to-earnings ratio of 8.12 [11] Group 4 - The Japanese trading houses provide solid dividends, with Marubeni tripling its dividend payout over the last three years and Mitsui more than doubling its dividend during the same period [12] - Investing in these Japanese stocks offers diversification similar to an exchange-traded fund (ETF) that includes multiple sectors [12] - While aggressive growth investors may not find these stocks appealing, those seeking steady growth should consider them, especially given Buffett and Abel's long-term interest [13]

Core Viewpoint - Seven & I Holdings plans to sell part of its stake in its banking subsidiary, Seven Bank, to Itochu Corporation [1] Group 1 - Seven & I Holdings is engaging in a strategic divestment by selling shares of Seven Bank [1] - The transaction involves a partnership with Itochu Corporation, a major trading company in Japan [1]

Group 1 - The article focuses on the Asia Value & Moat Stocks research service, which targets value investors looking for Asia-listed stocks with significant discrepancies between price and intrinsic value [1] - The service emphasizes deep value balance sheet bargains, such as net cash stocks and low price-to-book (P/B) stocks, as well as wide moat stocks that represent high-quality businesses [1] - The author provides a range of watch lists with monthly updates, particularly concentrating on investment opportunities in the Hong Kong market [1]

Group 1: Investment Strategy - Warren Buffett plans to hold eight stocks "indefinitely" and has recently increased his stakes in six of these companies [1][5] - Berkshire Hathaway's portfolio is valued at $285 billion, and Buffett is constantly looking for good deals within this portfolio [4][6] Group 2: Key Holdings - Two of the indefinite holdings are Coca-Cola and American Express, which have been held since 1988 and 1991 respectively [6][7] - Buffett has added to his position in Occidental Petroleum, spending approximately $35.7 million to acquire over 763,000 additional shares [9] Group 3: Oil Market Insights - Buffett's significant investment in Occidental Petroleum, totaling $12.7 billion in common stock and over $8 billion in preferred stock, indicates confidence in the stability or increase of crude oil prices [10] - The bullish outlook for oil is attributed to reduced capital spending during the COVID-19 pandemic, making it challenging to ramp up production to meet rising demand [11] Group 4: Japanese Trading Houses - Buffett has identified five Japanese trading houses—Mitsubishi, Itochu, Mitsui, Sumitomo, and Marubeni—as indefinite holdings, increasing stakes in all by more than one percentage point [14][15] - These trading houses are integral to Japan's economy, involved in diverse sectors such as energy, food resources, and healthcare, which mitigates risks from industry-specific downturns [16][17] Group 5: Valuation and Market Conditions - The current stock market is considered historically expensive, with the S&P 500's Shiller P/E ratio at 35.28, significantly above its 154-year average of 17.22 [19] - In contrast, the trailing-12-month P/E ratios for the Japanese trading houses range from 9 to 12, presenting attractive valuation opportunities amid a pricey market [20]

Core Insights - The individual has extensive experience in the energy industry, having worked for 22 years in various roles including engineering, planning, and financial analysis [1] - The investment strategy focuses on achieving returns that match the S&P 500 with lower volatility and higher income, emphasizing long-term holdings unless compelling reasons to sell arise [1] - The approach to investment is agnostic to asset class, market cap, sector, or yield, prioritizing total return by purchasing undervalued assets [1] Company and Industry Summary - The individual has managed their own investment portfolio since 1998, successfully meeting long-term return goals [1] - There is a beneficial long position in the shares of ITOCY, indicating confidence in the company's performance [2] - The article reflects personal opinions and does not involve compensation from any mentioned companies, ensuring an unbiased perspective [2]

Financial Data and Key Indicators Changes - Consolidated net profit increased by 6% or ¥25.5 billion year-on-year to ¥438.4 billion, achieving 50% of the annual forecast [2] - Core profit reached ¥396 billion, maintaining the second highest profit level after FYE2023, with a year-on-year growth of 3% [3][15] - Core operating cash flows exceeded ¥500 billion for the first time, reaching ¥513 billion, setting an all-time high [4][16] - Total shareholders' equity increased by approximately ¥170 billion to ¥5.6 trillion, with NET DER improving slightly to 0.47x [18] Business Line Data and Key Indicators Changes - Textile, Machinery, Food, The 8th, and Others saw an increase in profit compared to the same period of the previous fiscal year [5] - Textile profit increased due to inbound consumption and stable performance in the sports sector [5][6] - Machinery profit increased from strong sales in new and used cars, overseas automobile business, and gains from infrastructure sales [6] - Food profit improved due to the turnaround of the pork business and strong performance in NIPPON ACCESS and ITOCHU-SHOKUHIN [6][7] - The 8th saw significant profit increase from FamilyMart and extraordinary gains from group reorganization [7] - Metals & Minerals, Energy & Chemicals, and General Products & Realty saw a decrease in profit, particularly in Metals & Minerals due to operational issues [8][9] Market Data and Key Indicators Changes - The performance of group companies showed favorable trends, with 87.5% reporting profits, the highest for the first half [4] - Core profit in the non-resource sector increased by ¥10 billion to ¥306 billion, while the resource sector saw a slight increase to ¥89.5 billion [13][14] Company Strategy and Development Direction - The company aims to strengthen its profit base through growth investments while fulfilling commitments to stakeholders [21] - The management policy emphasizes profit opportunities shifting downstream and the necessity of investment for growth [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in steady progress towards achieving the annual forecast, supported by a solid profit base in non-resource sectors and turnaround in the pork business [2][3] - The company anticipates a ¥40 billion increase in profit for Textile due to extraordinary gains from consolidation in the second half [11] - A downward revision of ¥40 billion for Metals & Minerals was made due to falling iron ore prices [11][12] Other Important Information - The company aims for a total payout ratio of 50% for FYE 2025, with a dividend per share increase to ¥200, marking the 10th consecutive year of dividend increases [19] - The largest-ever share buybacks of ¥150 billion are underway, with about half completed as of the end of October [19] Q&A Session Summary - No specific questions or answers were recorded in the provided content [22]

Group 1 - ITOCHU Corp is noted for being the least dependent on the five major sectors in its operations [1] - The company has a long-term investment strategy, focusing on maximizing total return by purchasing undervalued assets [1] - The author has a beneficial long position in ITOCHU Corp shares, indicating confidence in the company's future performance [2] Group 2 - The article emphasizes the importance of long-term holding unless compelling reasons arise to sell [1] - The author has experience in the energy industry and has managed a personal investment portfolio since 1998, achieving returns that match the S&P 500 [1]

Core Insights - The article emphasizes the importance of value investing as a preferred strategy for identifying strong stocks in various market conditions [2] - It highlights the use of Zacks Rank and Style Scores system to identify high-quality value stocks, particularly those with high Zacks Ranks and "A" grades for Value [3] Company Analysis: Itochu (ITOCY) - Itochu currently holds a Zacks Rank of 1 (Strong Buy) and a Value grade of A, indicating strong potential for value investors [4] - The stock is trading at a P/E ratio of 10.81, significantly lower than the industry average of 16.25, suggesting it may be undervalued [4] - Over the past 12 months, Itochu's Forward P/E has fluctuated between 10.29 and 24.17, with a median of 11.63, indicating variability in market perception [4] - The company has a P/CF ratio of 9.11, which is also below the industry average of 18.99, further supporting the notion of undervaluation based on cash flow [5] - Over the past 52 weeks, Itochu's P/CF has ranged from 6.52 to 10.18, with a median of 8.09, reflecting its solid cash outlook [5] - Overall, the metrics suggest that Itochu is likely undervalued, making it an attractive option for value investors [6]