Buffett's investments in Japan

[Cigarbutt]

1 hour ago, Intelligent_Investor said:

Do we know Berkshire's exposure amount to the Yen carry trade? 

What is a Yen carry trade?

Do you think Mr. Buffett is involved in a Yen carry trade?

[gfp]

13 minutes ago, Cigarbutt said:

What is a Yen carry trade?

Do you think Mr. Buffett is involved in a Yen carry trade?

 

Don't worry about Mr. Buffett.  He knows what he is doing.  He has sold fixed rate corporate bonds in JPY.  He has locked in the very low rates that he pays for the duration of each bond.  The bonds serve as a natural currency hedge to the Japanese equities he bought.  The Japanese equities yield more than the (tax deductible) interest on the JPY debt.  This is "positive carry" so yes technically it is some version of the "Yen Carry Trade."  But unlike most Yen borrowers, who want to borrow JPY to buy higher yielding assets in other countries and are exposed to swap spreads and changes in holding costs of their trade, Buffett is borrowing JPY fixed rate and investing the proceeds in Japan.

 

Berkshire has no problem if refinancing JPY bonds becomes less attractive because Berkshire can just own the Japanese stocks funded with equity, or better yet, negative cost float.  If he expands his insurance business in Japan, he could even conceivably fund the Japanese equities with JPY denominated negative cost float.

Edited August 5 by gfp

[xboojum]

2 hours ago, Intelligent_Investor said:

Do we know Berkshire's exposure amount to the Yen carry trade? 

 

9.4 billion dollars in yen-denominated debt, per the 10-Q.

[DooDiligence]

I like this guys take. He talks about Buffett selling AAPL and the Yen carry trade. Doesn't he have long durations in Japan?

 

https://youtu.be/3BcgnYlr9yQ?si=kIfG4R1oOTxUuYx4

Edited August 6 by DooDiligence

[gfp]

1 minute ago, CorpRaider said:

How much have the trading company positions sold off?  I always kick myself for not buying some back around when he was looking (I couldn't do the financing like he could...making it a no brainer...of course).

[backtothebeach]

57 minutes ago, gfp said:

 

Couldn't you simply run a negative JPY balance at IB? Margin cost does not look too bad:

 

JPY	0 ≤ 11,000,000	1.608% (BM + 1.5%)
	11,000,000 ≤ 114,000,000	1.108% (BM + 1%)
	114,000,000 ≤ 5,700,000,000	0.858% (BM + 0.75%)
	5,700,000,000 ≤ 23,000,000,000	0.75% (BM + 0.5%)

[winjitsu]

On 8/9/2024 at 3:19 AM, backtothebeach said:

 

Couldn't you simply run a negative JPY balance at IB? Margin cost does not look too bad:

 

JPY	0 ≤ 11,000,000	1.608% (BM + 1.5%)
	11,000,000 ≤ 114,000,000	1.108% (BM + 1%)
	114,000,000 ≤ 5,700,000,000	0.858% (BM + 0.75%)
	5,700,000,000 ≤ 23,000,000,000	0.75% (BM + 0.5%)

Yes, then you are now short yen and taking part in the “carry trade”. 
 

Im not an economist, but with japan raising and usa lowering rates, i think 160 is the highest well see and wont get back there

[UK]

13 hours ago, winjitsu said:

Yes, then you are now short yen and taking part in the “carry trade”. 
 

Im not an economist, but with japan raising and usa lowering rates, i think 160 is the highest well see and wont get back there

 

I think at this point it might be to late and dangerous to do with yen too (unless you have some great ideas with jpy exposure). Maybe it still could go even lower if they had some kind of currency crisis, but I have no idea how to have any conviction on this, meanwhile it seems already to cheap: 

 

https://www.economist.com/big-mac-index

 

Instead, maybe by some wishful thinking, I have some expectations of maybe EUR becoming 'new yen', in terms of carry trade in some not too distant future.

 

Edited August 24 by UK

[gfp]

4 hours ago, UK said:

 

I think at this point it might be to late and dangerous to do with yen too (unless you have some great ideas with jpy exposure). Maybe it still could go even lower if they had some kind of currency crisis, but I have no idea how to have any conviction on this, meanwhile it seems already to cheap: 

 

https://www.economist.com/big-mac-index

 

Instead, maybe by some wishful thinking, I have some expectations of maybe EUR becoming 'new yen', in terms of carry trade in some not too distant future.

 

 

WEB is already there -

[DooDiligence]

Dude’s a friggin gangster. You kinda expect to see him sporting a huge back tat and missing a pinky finger.

[UK]

44 minutes ago, DooDiligence said:

Dude’s a friggin gangster. You kinda expect to see him sporting a huge back tat and missing a pinky finger.

[John Hjorth]

On 8/24/2024 at 4:24 PM, gfp said:

 

WEB is already there -

 

1 hour ago, DooDiligence said:

Dude’s a friggin gangster. You kinda expect to see him sporting a huge back tat and missing a pinky finger.

 

 

I still remember @gfp posting in the first place here on CoBF about these - then 'new' [<- ?] Berkshire Yen borrowings tapping into the capital markets at low interest rates, just thinking 'what the h**k is the man up to?'.

 

Well, we got our questions answered.

 

He is indeed a true multi-disciplinary, tool in the tool box chosen and carefully matched to the situation he's investing into.

[Gamecock-YT]

What’s the odds 7-11 gets bought out by a trading house with assistance from Berkshire? Might be a White Knight solution to their quagmire of wanting to keep it ‘Japanese’. One of their Japanese rivals, FamilyMart, is already owned by Itochu which is one of the trading companies BRK has a stake in.

[MungerWunger]

^ and Mitsubishi owns ~ 50% of Lawson. Would be interesting / cool if Berkshire owned a piece of each of the big 3 convenience stores in Japan (7-Eleven, Lawson, and FamilyMart)