Samer Choucair: Berkshire Is Staying With Japan Because Cash-Flow Quality Matters More Than Interest-Rate Noise
Investment leader Samer Choucair said Berkshire Hathaway’s decision to maintain its stakes in Japan’s major trading houses, despite Japanese government bond yields rising to their highest levels in roughly three decades, reflects an institutional approach focused on cash-flow quality, business-model strength, and long investment horizons rather than short-term movements in interest rates.
Choucair’s comments followed remarks in Tokyo by Greg Abel, chief executive of Berkshire Hathaway, who said higher Japanese bond yields do not represent a fundamental challenge to the five major trading companies in which Berkshire owns stakes exceeding 10%. The comments came as the yield on Japan’s 10-year government bond moved above 3% for the first time since 1996, while the spread with U.S. Treasury yields continued to narrow.
Samer Choucair said one of the most common mistakes in interpreting such developments is to assume that a rise in sovereign yields automatically translates into an immediate erosion of corporate value.
Higher yields become a genuine investment problem, he argued, when they begin to impair a company’s ability to finance growth or force a material change in capital allocation. A shift in the bond curve alone does not necessarily undermine the value of a strong business.
Choucair pointed to Japan’s major trading houses, including Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo, whose diversified portfolios span energy, metals, food, logistics, and other industries.
That diversification, he said, gives them greater resilience when financing costs rise because their earnings are not dependent on a single sector, commodity, or economic cycle.
Berkshire’s Long-Term Japan Thesis
Samer Choucair said Berkshire Hathaway began building its Japanese positions in 2019 and subsequently increased its holdings to more than 10% in each of the five trading houses.
By the end of 2025, the combined cost basis of those positions stood at approximately $15.4 billion, while their market value had risen above $35 billion. The companies also generated roughly $862 million in aggregate dividends during the year.
For Choucair, those figures illustrate why Berkshire’s Japan strategy should be viewed through the lens of long-duration cash-flow economics rather than short-term macro volatility.
The group did not simply buy exposure to Japan as a country. It acquired stakes in companies with diversified cash flows, disciplined capital allocation, significant real-economy exposure, and the ability to return capital to shareholders.
That distinction becomes even more important as Japanese interest rates normalize after decades of exceptionally low borrowing costs.
Yen Financing Was Part of the Investment Architecture
Choucair said yen-denominated financing has been a central part of Berkshire Hathaway’s investment thesis in Japan.
Berkshire borrowed in yen in amounts broadly comparable to the cost of acquiring its stakes, with maturities extending slightly beyond five years. This structure created a positive carry in which dividends from the trading houses helped cover financing costs.
As Japanese yields rise, that positive spread is likely to narrow gradually.
But Choucair said the investment case should not be reduced to the financing arbitrage alone.
The core thesis remains the underlying quality of the businesses, their capacity to generate cash, and their discipline in deploying capital.
“The financing structure improves the economics,” Samer Choucair said, “but it does not replace the business case. The long-term value still comes from companies that can generate cash consistently and allocate it intelligently.”
Market Cost of Capital Is Not the Same as Investor Cost of Capital
Choucair said institutional investors need to distinguish between the market-wide cost of capital and the actual financing cost available to a particular investor.
Berkshire Hathaway entered Japan when borrowing costs were historically low and secured financing under conditions that are no longer available to a new investor entering the market today.
A new buyer therefore faces a higher discount rate.
That changes valuation mathematics even if the quality of the underlying companies remains unchanged.
According to Samer Choucair, the correct question is not whether Japan is still “cheap” or whether the opportunity has disappeared because yields have risen.
The more relevant question is whether the future cash flows generated by those companies justify their current market prices under today’s higher required rate of return.
That is the distinction institutional capital must make when monetary conditions change.
Why the Trading Houses Still Matter
Japan’s trading houses occupy a distinctive position in global markets.
Their businesses extend across commodity supply chains, energy infrastructure, food, logistics, industrial assets, metals, and international investments.
This breadth gives them a degree of internal diversification that can help offset weakness in individual business lines.
For investors, Choucair said this means the companies should not be valued purely as commodity proxies.
Their value increasingly depends on portfolio management, asset recycling, shareholder returns, governance, and the quality of free cash flow produced across different cycles.
That framework helps explain why Berkshire can tolerate higher Japanese yields without immediately changing its long-term investment position.
Implications for Gulf Investors
Choucair said developments in Japan also carry important implications for investors in the Gulf.
Japanese trading houses have historically played a major role in energy, petrochemicals, metals, and supply chains connecting Asia with Gulf economies.
Their capital-allocation decisions therefore have consequences well beyond Japan.
A sustained return of Japanese capital toward domestic assets could influence demand for Asian and Gulf dollar-denominated debt, particularly if domestic Japanese yields continue to rise and become more competitive relative to foreign fixed-income opportunities.
That does not necessarily imply a shortage of sovereign financing for Gulf issuers, Choucair said, but it could gradually change the relative attractiveness of international bond markets for Japanese investors.
The broader implication is that Gulf borrowers may need to operate in a global capital market where Japanese investors have more credible domestic alternatives than they did during the era of near-zero yields.
The Risks Have Not Disappeared
Samer Choucair cautioned that Berkshire’s continued commitment to Japan should not be interpreted as evidence that higher yields are irrelevant.
If yields continue to rise faster than corporate earnings, valuation multiples could come under pressure.
New yen-denominated borrowing will also become more expensive, reducing the attractiveness of financing structures that worked particularly well in the low-rate environment.
The five trading houses also have different sensitivities to commodities, energy prices, currencies, and global growth.
They should therefore not be treated as interchangeable assets simply because Berkshire owns all five.
Investors still need to analyze the composition and durability of earnings at the company level.
Cash Flow Over Geography
For Choucair, the most important lesson for Gulf investors is not to replicate Berkshire Hathaway’s portfolio.
It is to replicate the decision-making framework.
That means matching the currency of the asset with the liability where practical, prioritizing free cash flow over geographic narratives, building positions progressively rather than all at once, and developing long-term governance relationships with companies where significant capital is committed.
This approach places less emphasis on predicting the exact level of interest rates and more emphasis on understanding how businesses behave under different financing conditions.
The relevant question is whether a company can continue generating cash, reinvesting productively, and rewarding shareholders even when its cost of capital rises.
The Strategic Outlook
Samer Choucair concluded that institutional investing in the next phase will be less about accurately forecasting where bond yields peak and more about identifying which companies can withstand structurally higher capital costs.
Berkshire Hathaway’s Japan strategy illustrates that distinction.
Higher rates change discount rates, financing costs, and valuations, but they do not automatically destroy the economics of companies with strong balance sheets, diversified businesses, and durable free cash flow.
For Gulf investors, Choucair said the lesson is straightforward: the strongest long-term portfolios will not necessarily be built around the markets with the lowest interest rates, but around the companies capable of producing cash and compounding capital through different rate cycles.
“The institutional investor’s real edge is not predicting every move in the yield curve,” Samer Choucair said. “It is knowing which companies can continue to generate cash, grow, and absorb a higher cost of capital for decades.”