Warren Buffett stated on Saturday that Berkshire Hathaway is likely to increase its stakes in the five Japanese trading houses it currently holds.

In his annual letter to Berkshire shareholders, the billionaire investor revealed that Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo have agreed to "moderately relax" the limits that kept Berkshire's ownership stakes below 10%.

As of the end of 2024, Berkshire's investments in these companies amounted to $23.5 billion. "Over time, you will likely see Berkshire's ownership of all five increase somewhat," Buffett noted. The 94-year-old Buffett also mentioned that he and Berkshire Vice Chairman Greg Abel, his designated successor as CEO, are focused on long-term investments.

"I expect that Greg and his eventual successors will hold this Japanese position for many decades and that Berkshire will find other ways to work productively with the five companies," Buffett wrote. "Both of us appreciate their capital deployment, their management, and their attitude toward their investors," Buffett added.

Known as "sogo shosha," Japanese trading houses deal in a vast array of materials, products, and food, often acting as intermediaries and providing logistical support. They are also heavily involved in the real economy, including commodities, shipping, and steel.

Berkshire began investing in these trading houses in 2019, attracted by their financial stability compared to their low stock prices. On Buffett's 90th birthday in August 2020, Berkshire revealed its 5% ownership stakes.

Buffett, who prefers to avoid businesses he doesn't understand, told Nikkei in 2023 that the trading houses are "really very similar to Berkshire," the Omaha, Nebraska-based conglomerate he has led since 1965. Berkshire invested $13.8 billion in its current holdings and expects $812 million in dividend income in 2025, according to Buffett's letter.

"This was a good value investment when others might have seen them as value traps," commented Cathy Seifert, an analyst at CFRA Research who rates Berkshire a "hold." She added that Buffett's remarks indicate a positive working relationship with the trading houses.

Berkshire has also issued fixed-rate, yen-denominated bonds. However, Buffett mentioned that the conglomerate seeks "currency neutrality" and has no stance on future currency changes. On Saturday, Berkshire reported $1.15 billion in foreign currency gains after taxes in 2024 from non-dollar-denominated senior debt.