Berkshire's New CEO Greg Abel Makes First Big Buys in Japan

For the first time in over half a century, Berkshire Hathaway is under new leadership. Warren Buffett retired as CEO on December 31, handing day-to-day control and oversight of the company's massive $322 billion investment portfolio to his successor, Greg Abel. While Buffett remains Chairman, this marks the beginning of a new era for the conglomerate.

Greg Abel, who shares Buffett's core value-investing philosophy, has made his first significant moves as CEO. Contrary to Buffett's famous mantra of 'never bet against America,' Abel's initial major purchases have been international. This represents a notable departure from the company's historical focus, even as the investment discipline remains consistent.

Specifically, Abel has directed capital into Japanese companies. In mid-March, Berkshire added to its existing stakes in Japanese trading houses Itochu, Marubeni, and Sumitomo. Days later, Abel opened a brand new, $1.8 billion position in the Japanese insurer Tokio Marine.

These moves build on a strategy Abel helped initiate back in 2019, which also includes investments in Mitsubishi and Mitsui. Collectively, Berkshire now has over $43 billion invested in Japanese stocks. The purchases were executed via regulatory Form 4 filings, providing transparency into the new CEO's early priorities.

This shift matters because it reflects a major assessment of global market valuations by one of the world's most respected capital allocators. Abel is acting on a clear signal: value is increasingly difficult to find in the United States. The S&P 500's Shiller Price-to-Earnings Ratio is at its second-highest level in 155 years, trailing only the dot-com bubble.

The high valuation of U.S. markets had already influenced Buffett's actions, as he was a net seller of equities for 13 consecutive quarters before retiring. Abel is now extending that cautious stance by looking abroad for opportunities that meet Berkshire's stringent value criteria.

The Japanese companies targeted, particularly the trading houses known as *sogo shosha*, trade at high-single to low-double-digit price-to-earnings ratios. This is a stark contrast to the premium valuations common on Wall Street. Abel is prioritizing businesses that offer both a margin of safety and shareholder-friendly policies.

Furthermore, these companies are known for generous capital-return programs through dividends and have management teams with modest pay packages. This alignment with shareholder interests is a hallmark of Berkshire's investment philosophy. Abel's actions confirm that while the geographic focus may be new, the core principles of value and stewardship remain unchanged.

For investors, this signals that Berkshire, under Abel, will be a global hunter for bargains. Until compelling value re-emerges in the U.S., the company's capital is likely to continue flowing to international markets where its criteria are met.