Warren Buffett's company just raised $628 million selling samurai bonds as Trump's tariffs rocked markets
Warren Buffett's Berkshire Hathaway issued $628 million of so-called samurai bonds on Friday.
Several Japanese companies postponed similar bond sales as Trump's tariffs rocked markets.
Strategist Larry McDonald suggested Buffett was raising fresh funds to go on an epic buying spree.
Warren Buffett's Berkshire Hathaway sold yen-denominated debt worth $628 million on Friday, even as Japanese companies delayed bond issues amid roiling markets and a burgeoning trade war.
The famed investor's conglomerate issued six tranches of bonds ranging from three to 30 years, and offered higher premiums than its last yen note issue in October, per a term sheet viewed by Reuters.
Beverage makers Asahi and Suntory and Cup Noodle owner Nissin Foods postponed yen-bond issues they had planned for this week as President Donald Trump's sweeping tariffs and threats of retaliatory duties tanked stocks and rattled bond markets worldwide.
Buffett, famous for keeping his cool when others panic, forged ahead.
The Berkshire CEO nearly doubled his company's stash of cash and Treasurys to more than $320 billion last year, as he pared key holdings such as Apple and Bank of America and halted stock buybacks. This latest fundraising fueled fresh speculation on social media that the bargain hunter is preparing to pounce as stock prices reel.
"Just wow," Larry McDonald, the author of "The Bear Traps Report" and former head of US macro strategy at Société Générale, posted on X. "Buffett is loaded with cash and he's reaching into the margin account (borrowing) in yen. Next 12 months - he's going to buy this puke festival with both hands."
Berkshire has been issuing so-called samurai bonds since 2019 to finance its investments in five Japanese trading houses: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. Friday's yen deal was its smallest so far, which could reflect limited investor appetite given all the market turmoil.
Buffett's company raised its stakes in the five largest "sogo shosha" in March, after he disclosed in his annual shareholder letter in February that the quintet had agreed to let Berkshire increase its ownership of each of them to more than 10%.
The billionaire investor wrote that he and his team originally piled in because they were "amazed" at the companies' cheap valuations.
Buffett also praised their use of capital, quality of management, and shareholder-friendly policies. He pointed to their responsible stock buybacks and dividend increases, and their more modest executive compensation compared to US counterparts.
The famously long-term investor said he expected his planned successor Greg Abel and Abel's successors to keep Berkshire invested in the five companies for "many decades" to come. He also boasted that Berkshire had spent $13.8 billion on the positions, which were worth $23.5 billion, or 70%, more at the end of 2024.
Moreover, Buffett said the five bets were poised to yield $812 million in dividends this year, dwarfing the $135 million of interest on yen bonds that Berkshire expected to pay.
Buffett's late business partner, Charlie Munger, sang the Japan bet's praises on a podcast in 2023.
"If you're as smart as Warren Buffett, maybe two, three times a century, you get an idea like that," he said. "It was like having God just opening a chest and just pouring money into it."
Munger explained that Berkshire was able to borrow money for 10 years at 0.5% a year and use it to purchase stocks yielding roughly 5% in dividends annually, a type of investment known as a carry trade.
Shares of all five Japanese trading houses have fallen this year with Mitsubishi down about 5%, Marubeni and Sumitomo down about 7%, Itochu down 16%, and Mitsui down 20%. They now trade close to where they did early last year, which could make them appealing targets to an investor with deep pockets and a love for deals.
Read the original article on Business Insider
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
12 minutes ago
- Yahoo
Could Investing $10,000 in Markel Make You a Millionaire?
Markel is often thought of as an early-stage Berkshire Hathaway due to similarities in the business model. The company is trading for a significant discount to a conservative estimate of its intrinsic value. Markel isn't likely to be a millionaire-maker quickly, but it could certainly do it over time. 10 stocks we like better than Markel Group › Turning a $10,000 investment into $1 million or more would mean a 100X result. But it isn't as far-fetched as it might seem, and you don't necessarily need to invest in volatile high-tech companies to make it happen. One of my favorite candidates to be a millionaire-making stock in my own portfolio is insurance company Markel (NYSE: MKL), which does things much differently than its insurance industry peers. In fact, Markel's business model often draws comparisons to an early stage Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), and to say that Berkshire has been a millionaire maker would be a major understatement. With that in mind, here's a brief overview of Markel's business model, why the stock could be a good value today, and how it could turn $10,000 into a million-dollar investment simply by continuing to execute on its time-tested growth strategy. If you aren't familiar with Markel, here's a quick overview of its business. There are three main components. At its core, Markel is an insurance company. It mainly operates in specialty insurance (the excess and surplus, or E&S lines, in insurance terms) and reinsurance. These are types of insurance that can be rather difficult, but that have enormous profit potential. In addition, Markel invests some of its float in the stock market, similar to Berkshire Hathaway. As of the latest information, Markel owned about $11.3 billion worth of stocks (and the largest holding happens to be Berkshire). The company's equity investments have delivered 12.8% annualized returns over the past five years. Finally, Markel Ventures is the company's division that acquires entire businesses. Unlike Berkshire, which needs to buy massive companies to move the needle, Markel has the luxury that it can invest a meaningful amount of money in early stage businesses with lots of growth potential. Just to name a few examples, Markel Ventures owns a luxury handbag maker, a houseplant company, a homebuilder, and several others. Last year, Markel Ventures generated $5.1 billion in revenue. This isn't exactly Berkshire's business model, but it's a pretty similar one. And it follows one of Warren Buffett's top rules for conglomerate building: Be willing to own minority shares of businesses (common stocks) while pursuing opportunistic ways to own entire companies as well. Over the 60-year period that Warren Buffett has run Berkshire Hathaway, this has resulted in a total return of more than 5,500,000%. To say that this is a time-tested model would be an understatement. Markel recently announced a strategic review of its business due to lackluster profitability in its insurance business and generally subpar stock performance. Just to name a few things that have already been done, Markel decided to pull the plug on several unprofitable insurance lines and has already decided that improving the technology capabilities of its insurance business needs to be a priority. According to management, Markel's intrinsic value has grown at an 18% annualized rate over the past five years. But its stock price has only grown at a 9% rate. Management estimates a $2,610 per-share intrinsic value for the business, and the stock trades for about $1,935 as I'm writing this. That's a big valuation gap. Management also announced a $2 billion stock buyback program along with the review and said that this will be a near-term focus of capital deployment. So, the company believes its stock price doesn't reflect the business' value and is putting its money where its mouth is. The short answer is yes. But it's unlikely to happen quickly. Markel is designed to be a long-term compounder that can produce returns that are superior to the overall stock market. Over long periods, the S&P 500 has produced total returns of about 10% annualized, and in the modern era (since Warren Buffett has been running the company), Berkshire Hathaway has produced 19.9% annualized returns. So, assuming that Markel successfully beats the S&P over the long term, here's how long it could take to turn a $10,000 investment into $1 million: Long-Term Annualized Total Return Years to Turn $10k Into $1 Million 12% 42 14% 36 16% 32 18% 29 20% 26 Data source: Author's own calculations. Years are rounded to the nearest whole number. Now, I don't necessarily think Markel, or any other company, will produce Berkshire-like returns over a 60-year period. But I do believe that with Markel's strategy, it's entirely possible to significantly outpace the market. In short, the most likely scenario (which would still be very impressive) would be one of the first few rows in the chart. For context, since it went public in 1986, Markel has delivered 15% annualized returns, so there is real-world evidence that the company can beat the market. Of course, this assumes that you invest $10,000 once. The best way to approach a stock like Markel or Berkshire Hathaway (or most other compounding-focused stocks for that matter) is to invest incrementally over time. But the point is that even with a single investment, a stock with steady market-beating returns can have massive wealth-building potential over time. Before you buy stock in Markel Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Markel Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $649,102!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $882,344!* Now, it's worth noting Stock Advisor's total average return is 996% — a market-crushing outperformance compared to 174% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Matt Frankel has positions in Berkshire Hathaway and Markel Group. The Motley Fool has positions in and recommends Berkshire Hathaway and Markel Group. The Motley Fool has a disclosure policy. Could Investing $10,000 in Markel Make You a Millionaire? was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
12 minutes ago
- Yahoo
This Is Warren Buffett's Best Advice About Investing in the Stock Market Right Now
The market may be surging right now, but it's wise to prepare for volatility just in case. Market downturns can be fantastic investing opportunities with the right strategy. Investing consistently can reduce your risk while maximizing your long-term earnings. 10 stocks we like better than S&P 500 Index › The stock market has been on a rollercoaster of ups and downs so far this year, and some investors may be having mixed feelings about what that means for their strategy. While the market is thriving right now (with the S&P 500 (SNPINDEX: ^GSPC) surging by more than 20% between April and June), there's still plenty of uncertainty about the future. Tariff policies could change in an instant, potentially triggering more volatility. No matter what may be coming, longtime investor Warren Buffett has some timeless advice about investing during periods of uncertainty. Here are three of his best tips for protecting your portfolio while maximizing your earnings. One of Warren Buffett's best tips for investing amid volatility is to "be fearful when others are greedy, and be greedy when others are fearful." He offered this advice in a 2008 opinion piece for The New York Times, when investors were discouraged and pessimistic during the Great Recession. He went on to explain that while investors should be cautious of weak companies, there's no reason to fear investing in strong businesses. "These businesses will indeed suffer earnings hiccups, as they always have," he writes. "But most major companies will be setting new profit records 5, 10 and 20 years from now." Since that article was published, the S&P 500 has soared by a staggering 535% -- proving Buffett's point. It's also important to note that after Buffett's article published, the market still had several more months of decline before it bottomed out. But those who rode out the storm and continued buying anyway saw the most substantial earnings over time. If the market takes a turn for the worse in the coming months, that's your best opportunity to "be greedy." It may be a rough ride in the short term, but those who stick it out will reap the biggest rewards. It's not enough to simply invest anywhere and hope for the best; you'll need to invest in the right places. In Berkshire Hathaway's 2021 letter to shareholders, Buffett explained his and then-business partner Charlie Munger's investing strategy. "[W]e own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves," he writes. "That point is crucial: Charlie and I are not stock-pickers; we are business-pickers." Even if a stock has an enticing price and a history of earning above-average returns, that doesn't necessarily make it a good buy. Weak companies can still thrive when the market is surging, but those businesses will struggle to recover from economic instability. If you invest in the wrong places now, it will be much harder to pull through a downturn. But by investing in strong companies with healthy fundamentals and a capable leadership team, your portfolio is far more likely to recover from tough times and experience long-term growth. It's tempting to wait until the perfect moment to invest, especially if you're worried about volatility on the horizon. But according to Buffett, waiting too long to buy can do more harm than good. "I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month or a year from now," he writes in the Times article. "What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over." During the Great Recession, the S&P 500 reached its lowest point in March 2009. But the recession itself didn't officially end until June of that year. In those three months alone, the index surged by close to 40%. One of the best ways to maximize your earnings in the stock market is to invest consistently, no matter what the market is doing. Timing the market accurately is next to impossible, but if you invest regularly through all the ups and downs, you're far more likely to see positive returns over time. Nobody knows what the coming weeks or months will look like for the stock market, but the more you can prepare now, the better off you'll be. By investing consistently in the right places, your portfolio can thrive no matter what's on the horizon. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $649,102!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $882,344!* Now, it's worth noting Stock Advisor's total average return is 996% — a market-crushing outperformance compared to 174% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy. This Is Warren Buffett's Best Advice About Investing in the Stock Market Right Now was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
15 minutes ago
- Yahoo
Analysis-OPEC+ would struggle to cover major Iranian oil supply disruption
By Ahmad Ghaddar and Seher Dareen LONDON (Reuters) -Oil market participants have switched to dreading a shortage in fuel from focusing on impending oversupply in just two days this week. After Israel attacked Iran and Tehran pledged to retaliate, oil prices jumped as much as 13% to their highest since January as investors price in an increased probability of a major disruption in Middle East oil supplies. Part of the reason for the rapid spike is that spare capacity among OPEC and allies to pump more oil to offset any disruption is roughly equivalent to Iran's output, according to analysts and OPEC watchers. Saudi Arabia and the United Arab Emirates are the only OPEC+ members capable of quickly boosting output and could pump around 3.5 million barrels per day (bpd) more, analysts and industry sources said. Iran's production stands at around 3.3 million bpd, and it exports over 2 million bpd of oil and fuel. There has been no impact on output so far from Israel's attacks on Iran's oil and gas infrastructure, nor on exports from the region. But fears that Israel may destroy Iranian oil facilities to deprive it of its main source of revenue have driven oil prices higher. The Brent benchmark last traded up nearly 7% at over $74 on Friday. An attack with a significant impact on Iranian output that required other producers to pump more to plug the gap would leave very little spare capacity to deal with other disruptions - which can happen due to war, natural disasters or accidents. And that with a caveat that Iran does not attack its neighbours in retaliation for Israeli strikes. Iran has in the past threatened to disrupt shipping through the Strait of Hormuz if it is attacked. The Strait is the exit route from the Middle East Gulf for around 20% of the world's oil supply, including Saudi, UAE, Kuwaiti, Iraqi and Iranian exports. Iran has also previously stated that it would attack other oil suppliers that filled any gap in supplies left due to sanctions or attacks on Iran. "If Iran responds by disrupting oil flows through the Strait of Hormuz, targeting regional oil infrastructure, or striking U.S. military assets, the market reaction could be much more severe, potentially pushing prices up by $20 per barrel or more," said Jorge Leon, head of geopolitical analysis at Rystad and a former OPEC official. CHANGE IN CALCULUS The abrupt change in calculus for oil investors this week comes after months in which output increases from OPEC and its allies, a group known as OPEC+, have led to investor concern about future oversupply and a potential price crash. Saudi Arabia, the de facto leader of OPEC, has been the driving force behind an acceleration in the group's output increases, in part to punish allies that have pumped more oil than they were supposed to under OPEC+ agreements. The increases have already strained the capacity of some members to produce more, causing them to fall short of their new targets. Even after recent increases, the group still has output curbs in place of about 4.5 million bpd, which were agreed over the past five years to balance supply and demand. But some of that spare oil capacity - the difference between actual output and notional production potential that can be brought online quickly and sustained - exists only on paper. After years of production cuts and reduced oilfield investment following the COVID-19 pandemic, the oilfields and facilities may no longer be able to restart quickly, said analysts and OPEC watchers. Western sanctions on Iran, Russia and Venezuela have also led to decreases in oil investment in those countries. "Following the July hike, most OPEC members, excluding Saudi Arabia, appear to be producing at or near maximum capacity," J.P. Morgan said in a note. Outside of Saudi Arabia and the UAE, spare capacity was negligible, said a senior industry source who works with OPEC+ producers. "Saudi are the only ones with real barrels, the rest is paper," the source said. He asked not to be named due to the sensitivity of the matter. PAPER BARRELS Saudi oil output is set to rise to above 9.5 million bpd in July, leaving the kingdom with the ability to raise output by another 2.5 million bpd if it decides to. That capacity has been tested, however, only once in the last decade and only for one month in 2020 when Saudi Arabia and Russia fell out and pumped at will in a fight for market share. Saudi Arabia has also stopped investing in expanding its spare capacity beyond 12 million bpd as the kingdom diverted resources to other projects. Russia, the second largest producer inside OPEC+, claims it can pump above 12 million bpd. JP Morgan estimates, however, that Moscow can only ramp up output by 250,000 bpd to 9.5 million bpd over the next three months and will struggle to raise output further due to sanctions. The UAE says its maximum oil production capacity is 4.85 million bpd, and told OPEC that its production of crude alone in April stood at just over 2.9 million bpd, a figure largely endorsed by OPEC's secondary sources. The International Energy Agency, however, estimated the country's crude production at about 3.3 million bpd in April, and says the UAE has the capacity to raise that by a further 1 million bpd. BNP Paribas sees UAE output even higher at 3.5-4.0 million bpd. "I think spare capacity is significantly lower than what's often quoted," said BNP analyst Aldo Spanjer. The difference in ability to raise production has already created tensions inside OPEC+. Saudi Arabia favours unwinding cuts of about 800,000 bpd by the end of October, sources have told Reuters. At their last meeting, Russia along with Oman and Algeria expressed support for pausing a hike for July. Sign in to access your portfolio
