from Japan sogo shosha – or generalist trading houses – have a distinctive culture, a fierce competitive streak, and a horror of being compared to their rivals.

One of them is the world’s greatest manipulator of endangered bluefin tuna; another forged his management system in a Siberian prison. One has just installed garden swings to make its leaders think; another was responsible for one of the worst trade scandals in history. A fifth has that of Botticelli The Bella Simonetta hanging outside his meeting room.

But as of this week, the big five – Mitsubishi, Mitsui, Itochu, Marubeni and Sumitomo – have something in common: Warren Buffett as a shareholder.

The registration of the most famous investor in the world in the registers of shareholders of trading houses has raised questions about the exact nature of a sector including the economic model, somewhere between private equity funds, arbitrageurs, capital -riskers and asset managers defy description.

As Tokyo investors digest the news of the $ 6 billion bet, some wonder if Mr. Buffett, whose conglomerate Berkshire Hathaway took a 5% stake in each of the trading houses, suddenly found any soul mates in a market that he has barely touched so far. “Berkshire Hathaway is actually similar to a trading house,” said Tatsuya Kikkawa, analyst at JPMorgan.

Doing business is their business. They always readjust their wallet and they are able to do it without too much emotional baggage.

Others suspect that Mr. Buffett comes to regret his choice and has plunged into a quintet of companies whose weaknesses he has not understood and whose shortcomings he cannot hope to remedy.

Japan’s trading companies – part fanatic adventurers, part the foundation of the establishment – are Japan’s early globalizers. Their interests span the globe, from snowboards, silk scarves and souvenir banana cakes to mega-hydro projects, chemical factories and oil exploration.

Through their involvement in all sectors, through thousands of subsidiaries and affiliates – as well as their selection of graduates from the country – they are the backbone of the Japanese economy. Several, especially Mitsubishi and Mitsui, have been around in one form or another since the 19th century.

Their role – from securing raw materials for a country with limited resources to financing projects and investing in venture capital – has evolved considerably over time. But one defining characteristic has endured: they are relentless negotiators.

Between them, the five trading houses have spent more than $ 50 billion in the past five years on cross-border transactions, according to Dealogic. For large swathes of the financial services industry, in Japan and beyond, they are key customers: sources, said an M&A banker in Tokyo, of a constant flow of transactions and demanding ongoing attention.

Not all are successful, and some high-profile commodity transactions have resulted in significant write-downs. But they are clearly different in their approach from the rest of Japanese companies.

Ken Lebrun, partner at Davis Polk law firm in Tokyo, said, “Doing business is their business. They always readjust their wallets and they are able to do it without too much emotional baggage. Selling a business is not seen as a failure, but simply part of what it does.

For fund managers who have spent years explaining to their clients that Japanese companies need a big re-evaluation, Mr. Buffett’s move looks like a rationale. The Tokyo stock market, where roughly half of all listed companies trade below book value, has for years been touted by brokers as a haven for value-driven investors – with trading houses in particular. lagging behind.

But for others, including those who worked inside trading houses, Berkshire’s bet came as a huge surprise.

On the basis of certain measurements, the case is convincing. With the exception of Itochu, all four companies are trading below their book value following a sharp sell-off at the height of the pandemic. And despite the disruption caused by the coronavirus, Mitsubishi and Sumitomo are forecasting a good dividend payout, and four in five expect to remain profitable.

“The fact that Warren Buffett chose to buy them speaks volumes about his confidence in their corporate governance and business acumen,” said John Vail, chief strategist at Nikko Asset Management.

Beyond valuation and a bet on a recovery in global commodity prices, Berkshire’s investment is a bet, analysts say. Mr Buffett is betting, they say, that becoming a shareholder will give Berkshire access to a mine of quality assets that Japanese groups have bought – sometimes at record prices – that seem to blend well with its own diverse portfolio which recently increased its exposure to the energy sector.

Instead of picking a winner from the trading houses, which generate one-fifth of their net profit on commodities, investing across the industry gives Berkshire a wider selection of the different assets each owns.

Itochu, which has been the most aggressive in expanding its non-resource businesses, such as food and clothing, owns Dole Food’s global packaged food and Asian fresh business, while Marubeni recently focused on the auto parts sales business in the United States. Mitsui’s bet on healthcare resulted in investments in IHH Healthcare in Malaysia and in Singapore-based DaVita Care, a subsidiary of the Berkshire-backed dialysis clinic operator DaVita in the United States.

Many of these assets have crossovers and collaboration opportunities with Berkshire’s broad portfolio that ranges from iPhone maker Apple, auto insurance company Geico, oil producer Occidental Petroleum, food producer Kraft Heinz to Dairy Queen ice cream chain.

JPMorgan’s Mr. Kikkawa said investing in the top five players is a smart appeal that plays on the very nature of Japanese groups, which despite their varying strengths, compete fiercely in pursuing similar deals. With each of the companies claiming there has been no previous contact with Berkshire, senior executives will rush to establish a relationship with Mr Buffett’s group and compete to impress with proposals for investment synergies.

“This will fuel the rivalry between CEOs and they will scramble to strike a landmark deal with Berkshire. As a result, only the best assets will be presented to Berkshire by each of the trading houses, ”said Mr. Kikkawa.

Jeremy White, a partner at the Tokyo-based Baker McKenzie law firm that has worked extensively with commercial companies, said that while Mr Buffett’s latest investment did not seem to live up to his famous emphasis on supporting simple business models, Japanese groups were united by their never-ending appetite for bargains.

“Yes, the business of trading houses seems complicated because the transactions they enter into are complicated. But it’s not like Enron where there’s a lot of financial engineering behind the scenes, ”White said. “When you realize that these companies are basically sets of negotiators who are constantly making deals, it’s actually pretty straightforward,” he added.

Still, former trading house executives have said the most difficult challenge will be to realize potential synergies between the companies and other parts of Berkshire’s sprawling portfolio. Rigid corporate cultures, conservative leaderships, and complex policies between trading houses and the thousands of subsidiaries they operate stand in the way.

A former Mitsubishi executive said trading houses are armed with rich resources, intelligence and talent to create value from their investments. “But CEOs need to perform better using these intangibles, hopefully with positive Buffett pressure,” he said.

Jason Ollison, director of Asianantic Global Advisors and former senior director of Sumitomo, said drastic changes in corporate culture would be needed to deliver on the promise that trading houses have as integrated conglomerates.

“Warren Buffett’s mantra is that the companies in which he invests should be simple, transparent and well managed. Trading houses are challenged when it comes to operating in this way, ”said Mr. Ollison.