We don’t all the time know which Berkshire Hathaway (NYSE:BRK.B) strikes are down to Warren Buffett particularly. But it surely’s pretty clear the latest investments in Japanese buying and selling homes are. 

Buyers like me, nonetheless, don’t have the flexibility to match Buffett’s Japanese offers. However I’m trying to comply with the same precept in relation to my very own portfolio.

Berkshire’s Japanese investments

Since 2019, Berkshire Hathaway has been shopping for shares in every of Japan’s 5 main buying and selling homes. And it has just lately obtained permission to extend its stake in every to above 10%.

This, nonetheless, isn’t essentially the most fascinating a part of the deal. Regardless of having large money reserves, Buffett’s firm has been financing the investments utilizing debt.

Extra particularly, it has been utilizing bonds denominated in Japanese yen that pay between 1% and a pair of.6% in curiosity. And the rationale for that is extraordinarily fascinating.

Buffett’s acknowledged plan is to generate income by receiving extra in dividends than it pays out in curiosity. But when it makes use of US forex, there’s a danger trade charges may transfer.

A weaker yen might make the worth of Berkshire’s dividends fall. However utilizing bonds denominated in Japanese forex implies that if the yen falls, Berkshire’s curiosity funds additionally drop.

It is a transfer that exploits Berkshire’s distinctive strengths — not many have the steadiness sheet to construction an funding on this method. In the same spirit, I’m additionally trying to persist with areas the place I’ve the same benefit.

UK shares

Berkshire has a novel means to function at scale, which is why I’m happy to be a shareholder. However its measurement can be its greatest problem – and the primary danger with the inventory over the long run.

That, nonetheless, isn’t an issue for somebody like me. And whereas Berkshire’s steadiness sheet offers it some benefits, being primarily based within the UK offers me some worthwhile insights.

Regardless of the S&P 500’s latest challenges, UK shares usually commerce at decrease valuations than their US counterparts. And a few of them have very sturdy aggressive positions.

Rightmove is a world away from Japanese buying and selling homes however it’s a very good instance of my level about traders maximising benefits. It’s the primary place consumers and sellers within the UK housing market go and I feel this aggressive place goes to be troublesome to disrupt.

There are essential dangers, together with the opportunity of rates of interest not falling as shortly as anticipated. And weighing these in opposition to the corporate’s spectacular margins isn’t easy.

In 2024, the agency generated £389.9m in gross sales, which is about $507m. That makes it far too small to be on Berkshire Hathaway’s radar, however it’s been on mine for a very long time.

Sticking to strengths

Warren Buffett’s investments in Japan are about benefiting from conditions the place Berkshire Hathaway has a bonus. And I’m trying to take the identical method with my very own investing.

Meaning taking a look at shares like Rightmove, the place I’ve first-hand expertise of the enterprise. It may not be large enough for Buffett, however that’s no downside for me.

It’s not the one inventory I’m contemplating in the mean time. However once I’m subsequent able to take a position, I’ll see the place the share price is and take a view about shopping for it.