Berkshire's stock hits a new high amid tech plunge as return to yen bonds sparks heated "increase positions in Japan" discussion

According to EqualOcean Finance APP, Berkshire Hathaway (BRK.A.US, BRK.B.US), the American insurance and investment giant long helmed by the “Oracle of Omaha” Warren Buffett, has appointed Mizuho Securities and BofA Securities to prepare for its first yen-denominated bond issuance since April this year, continuing its financing activities in the Japanese market. Just days before Berkshire announced its renewed yen bond issuance this Monday, as the market re-examined the relationship between AI capital expenditures, financing needs, and returns realization, Berkshire’s diversified business model and ample liquidity enabled its share price to reach a new all-time high last week, outperforming global tech benchmarks including the Nasdaq 100 during a sell-off in technology stocks.

When Abel, who officially succeeded Berkshire veteran Warren Buffett as CEO in January this year, was interviewed in early September, he stated that the group plans to hold its stakes in Japan’s five major trading houses for decades and may even increase its holdings. Therefore, following the news that Berkshire plans to issue yen bonds for the first time since April this year, the market speculates that Berkshire may continue to expand its presence in Japanese equities or increase its holdings in Japan’s top five trading houses, leading the Nikkei 225 index and the five trading giants to a stronger intraday rally.

Some media, citing informed sources, reported that Berkshire Hathaway has hired banks to prepare its first yen bond issuance since April, aiming to raise additional capital in Japan.

Sources revealed that Berkshire has appointed Mizuho Securities and BofA Securities to arrange a potential benchmark-sized yen bond issuance. The transaction is expected in the near future, subject to market conditions.

The company has typically issued yen bonds about twice a year. The latest issuance plan comes at a time when Japanese corporates have slowed domestic bond issuance. Bond supply surged in October, pushing up the additional yield, or credit spread, for Japanese corporate bonds over government bonds; new debt offerings have since tapered off. As shown in the chart above, Japanese domestic credit spreads on corporate bonds have widened.

This will mark Berkshire’s second yen-denominated bond issuance since Warren Buffett stepped down as CEO. Investors will focus on the premium spread offered and the scale of potential demand. In April this year, the company issued bonds in six tranches ranging from three to thirty years, totaling 272.3 billion yen, or about $1.7 billion. This was one of Berkshire’s largest yen-denominated issuances, second only to its first in 2019 and the issuance in October 2024.

Takashi Fujiwara, chief fund manager in the fixed income division of Resona Asset Management, stated: “Berkshire is well known in Japan due to its investments in Japanese equities. As long as the spreads are reasonable, there should be strong demand for these bonds.”

AI Trading Under Pressure, “Old Economy” Stocks Surge: Behind Berkshire’s Strength, Cash Dominance Regains Premium

Berkshire, the archetype of “old economy” stocks, hit fresh highs and vastly outperformed tech stocks last week. Meanwhile, the company has also entrusted Mizuho Securities and BofA Securities to prepare its first yen bond issuance since April, extending its Japan-focused financing strategy. Both developments indicate that global capital is increasingly valuing current earnings, balance sheet strength, and capital allocation ability.

Berkshire share prices have surpassed the historic highs set on November 2: Berkshire’s Class B shares closed at $579.09 on November 4, hitting a new closing high, and intraday on November 5 reached an all-time high of $586.30. However, they retreated with the U.S. market on Thursday, closing down 1.17%, still much less than the Nasdaq 100’s 6.36% and the Philadelphia Semiconductor Index’s 12.25% declines. As of the November 6 close, Berkshire Class B shares stood at $570.89, up approximately 5.24% for the week and near record highs compared to roughly 4.91% and 12.15% declines in the Nasdaq 100 and the Philadelphia Semiconductor Index during the same period.

“Old economy stocks” in the market are a tongue-in-cheek reference to companies in traditional industries, mature business models, and value investing targets, usually emphasizing tangible profits, cash generation, and valuation constraints. Berkshire embodies this style, fueled by a diverse profit base from its insurance, rail, utilities, manufacturing, and consumer sectors, with insurance float and operating cash flows supporting long-term investments, while large liquidity reserves allow for acquisitions, buybacks, and counter-cyclical positioning.

As the values of high-growth companies rely more on uncertain future large-scale investment returns, firms that already possess mature, profitable assets offer greater certainty to the market. Cathy Seifert, senior analyst at CFRA, recently noted that balance sheet strength, diversified operations, and share buybacks serve as support, suggesting capital may be shifting to lower-volatility, higher-quality companies.

Berkshire’s Q3 financial report, released November 7, shows that by the end of September, its cash, cash equivalents, and short-term U.S. Treasury holdings totaled approximately $377.4 billion, an increase of about $11.9 billion over Q2, remaining near all-time highs for the company’s cash flow. After deducting unsettled Treasury purchases, liquid funds still stood at a staggering $356.9 billion.

As of the end of September 2026, Berkshire’s insurance and other businesses held $36.034 billion in cash and equivalents and $336.735 billion in short-term U.S. Treasuries, with rail, utilities, and energy businesses holding an additional $4.666 billion, totaling $377.435 billion. Using the same comparison, the figure at the end of Q2 was $365.514 billion, a sequential increase of $11.921 billion.

Operationally, Q3 operating profit was $12.705 billion, down 5.8% year-on-year, as insurance underwriting and investment income were under pressure; however, BNSF rail, Berkshire Energy, and manufacturing, service, and retail segments all saw profits rise by about 19.3%, 8.3%, and 11.8%, showcasing the buffering power of diverse business streams.

However, by the end of Q3, the above assets included U.S. Treasury bonds for which payment had not been made, totaling $20.489 billion. This means Treasuries were accounted for as assets, but the cash had not yet been paid, while the payable obligation was recognized on the books. After adjusting for these payables, liquid funds stood at $356.946 billion; at the end of Q2, the comparable figure was $364.743 billion—a decrease of about $7.797 billion quarter-over-quarter.

Sitting on Massive Cash Reserves but Still Issuing Yen Debt: The Core of Berkshire’s Japan Strategy is Asset-Liability Matching

This potential issuance comes during a noteworthy window: after a funding surge by Japanese corporations in October, credit spreads have widened, and recent new bond supply has declined. Whether Berkshire attracts demand will depend on its credit quality, tenor, and final issue spread.

For investors, record share prices reflect equity market recognition, while the response to yen bonds will test creditors’ willingness to offer long-term funding and at what price. Details such as issue size, tenor, coupon rate, and specific use of proceeds have not been disclosed yet, so it is premature to assert that financing costs will decrease or that capital has been definitively allocated to adding Japanese equity positions.

Berkshire’s ongoing yen bond issuances are aligned with its long-term holdings in Mitsubishi Corporation, Itochu, Mitsui & Co., Marubeni, and Sumitomo Corporation. The combined cost for these five trading houses will be about $15.382 billion by the end of 2025, with a market value of about $35.368 billion, contributing $862 million in dividends for that year. The company has stated that yen borrowing is broadly matched with the yen cost basis of these investments. At that time, average financing costs were about 1.2%, while dividend yield on historical cost was about 5.6%.

This arrangement combines the dividends and long-term growth of mature enterprises with low-cost, same-currency liabilities, reducing net foreign exchange exposure arising from acquiring yen assets with dollar funds.

This bond issuance can continue to provide the funding base for Japanese investments, but it cannot yet be concluded that a new round of buying is underway. For example, of the 272.3 billion yen issued in April this year, part was used to refinance a total of 133.9 billion yen in maturing bonds, with the remainder supporting an acquisition of a minority stake in Tokio Marine Holdings. The financing serves both debt rollover and long-term asset allocation functions. Dollar cash serves as liquidity and investment reserves for the group, while yen financing supports Japanese assets and local debt management; these two do not conflict.

Berkshire’s latest financial report also shows that the weighted average interest rate for the new bonds issued in April was about 2.4%, higher than the approximately 1.4% average rate on its outstanding yen bonds at the end of September; thus, the investment significance of this transaction ultimately depends on whether a reasonable match can be achieved between financing cost and asset returns.

During Buffett’s era at the helm, Berkshire favored the five major Japanese trading houses primarily for their “global operations and capital allocation capability”—not just for trading or commodity price exposure. In his 2024 annual shareholder letter, Buffett made it clear that these companies have broad business interests and operate in similar ways to Berkshire; what attracted him initially was the contrast between exceptional financial records and relatively low share prices. Over time, he came to appreciate their management, capital utilization, and shareholder orientation—including moderate dividend increases, timely share buybacks, and restrained executive compensation.

Judging from Abel’s previous comments, Berkshire remains willing to hold its positions in the five major trading houses for the long term—even after significant share price increases—and may consider increasing holdings, demonstrating long-term confidence in their ability to generate cash flows, allocate capital effectively, and return value to shareholders through dividends and buybacks.