The Trade Warren Buffett Called His ‘Pleasant Surprise’

When Berkshire Hathaway disclosed its stakes in Japan’s five major sogo shosha – the diversified trading conglomerates that sit at the center of the Japanese economy – most Western investors shrugged. That was 2020. Since then, the position has more than doubled in value, and Berkshire recently confirmed it continues to hold and build these stakes following its May 2026 earnings report.

One name in that basket deserves particular attention right now: Itochu Corporation.

What Itochu Actually Does – and Why It Matters

Itochu is not a manufacturer. It is not a bank. It is something harder to categorize and, arguably, more durable. The company operates as a master intermediary across food, textiles, energy, machinery, aerospace, and financial services – touching virtually every corner of Japan’s consumer and industrial economy.

Its crown jewel is a controlling stake in FamilyMart, one of Japan’s largest convenience store chains with over 16,000 domestic locations and a growing presence across Southeast Asia. In a country where the convenience store is an institutional fixture – serving hot meals, handling government paperwork, and processing bill payments – FamilyMart is closer to infrastructure than retail.

The Numbers Buffett Saw That Others Missed

Itochu reported net profit of approximately 800 billion yen in its most recent fiscal year, with consistent growth in its consumer-facing segments. Return on equity has run above 15% for several consecutive years. The company carries a relatively conservative balance sheet for its size and has accelerated shareholder returns through both dividends and buybacks.

• Dividend yield: approximately 2.8% in yen terms
• Price-to-earnings ratio: trading at roughly 9–10x forward earnings
• FamilyMart contribution: consumer segment now accounts for the largest share of operating profit

For context, comparable U.S. consumer conglomerates trade at 18 to 22 times earnings. The valuation gap is real, even accounting for currency and structural differences.

Why This May Be the Right Moment

The yen has stabilized after years of weakness, which reduces the currency drag that previously weighed on yen-denominated returns for foreign holders. Meanwhile, Japan’s corporate governance reform push – which has pressured companies to improve capital efficiency and shareholder returns – is still gaining momentum, and Itochu is positioned to benefit as one of the cleaner operators in the sogo shosha space.

Berkshire’s continued commitment to these positions, reaffirmed in the May 2026 earnings materials, signals that the original thesis – durable businesses, cheap valuations, strong cash generation – remains intact.

What to Watch

Currency movement between the yen and dollar will influence reported returns for U.S.-based investors. Itochu’s energy segment exposure also introduces some commodity sensitivity. These are real variables worth monitoring. But for investors looking for a Berkshire-endorsed holding that still trades at a fraction of comparable American multiples, Itochu may be one of the more overlooked opportunities in the entire portfolio.

This editorial is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always conduct your own due diligence before making investment decisions.