Elliott Management Secures Stake In Warren Buffett-Backed Sumitomo Corp

Elliott Management Corp. has acquired a significant stake in Sumitomo Corp., a Japanese trading company favored by Warren Buffett.

What Happened: The activist investment group’s stake is reportedly worth “several tens of billions of yen,” translating to a 0.2% stake in Sumitomo for every ¥10 billion ($64 million) based on Friday’s closing share price. The specifics of the stake acquisition and discussions with Sumitomo remain undisclosed, Bloomberg reported on Monday.

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Sumitomo’s shares have experienced a significant surge since Buffett expressed interest in increasing his holdings in Japanese trading houses. The company’s shares hit an all-time high last week, marking a 27% increase this year. Other trading firms have also seen a rally in their stock prices due to increased shareholder returns.

Berkshire Hathaway Inc. BRK currently holds about 8.3% of Sumitomo, with plans to eventually own 9.9% of each trading firm it invests in, including Mitsubishi Corp., Mitsui and Co., Itochu Corp., and Marubeni Corp.

Why It Matters: Japan has emerged as a fertile ground for activist investing, with entities like the Tokyo Stock Exchange urging companies to improve balance sheet management and overhaul business strategies to boost shareholder returns. Elliott Management, led by billionaire Paul Singer, has been a key player in this trend, previously targeting firms such as Toshiba Corp., SoftBank Group Corp., and Dai Nippon Printing Co.

Buffett’s investment in Japanese trading houses, including Sumitomo, was first reported in August 2020. In an interview with Nikkei, he expressed his pride in these investments in 2023.

Earlier this year, Elliott Management acquired a 2% stake in Mitsui Fudosan Co. Ltd. and urged the company to sell its shares in Oriental Land, a key operator of the Tokyo Disney Resort. The activist investor proposed a 1 trillion yen ($6.74 billion) share buyback.

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