Buffett's little Japan handbook, and other lessons

WARREN BUFFETT has finally answered a question that has long intrigued investors: What sparked his interest in five Japanese trading houses in 2020, a bet that is now worth more than $25 billion?

- By Gearoid Reidy

The answer was hiding in plain sight: “I was just going through a little handbook that probably had two or three thousand Japanese companies in it,” he told investors at the annual general meeting in Omaha, Nebraska, earlier this month, shortly before announcing his resignation as head of Berkshire Hathaway, Inc. “There were these five trading companies selling at ridiculously low prices. So I spent about a year acquiring them.”

It’s the same screening methodology the typical Japanese retail trader uses. The “little handbook” is the Kaisha Shikiho, the “bible of Japanese equities,” indispensable for the country’s stock-pickers. Released quarterly for ¥2,800 (around $20), the Shikiho is a thick, dictionary-sized guide listing facts and figures on every one of the country’s nearly 4,000 listed companies.

Buffett’s approval should have thousands of his acolytes flocking to the English version, known as the Japan Company Handbook and spotted on his desk as far back as 12 years ago. But in a remarkable fumble, the publisher last year discontinued the English version, just months before the world’s most famous investor endorsed it.

Perhaps that makes it harder to find stock gems, giving an advantage to the patient investor that he has long championed. Fortunately, it’s not the only lesson on investing in Japan he imparted. Until now, Buffett has largely let his money do the talking — but recent remarks reveal lessons on investing there that more should know.

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