Warren Buffett ‘s Berkshire Hathaway raised its stakes in five Japan stocks — a good sign for investors in Japan, according to Credit Suisse. “This, together with Berkshire Hathaway’s recent issuance of JPY bonds, has put the spotlight on value and quality investment opportunities in Japan,” Credit Suisse said in a April 14 note. The Berkshire Hathaway chairman and CEO said last week that he had raised his stakes in five Japanese trading houses , and added that he may consider further investments. Berkshire Hathaway raised its stakes in Mitsubishi Corp. , Mitsui & Co ., Itochu , Marubeni and Sumitomo — all to 7.4%. Those five names appear to fulfill Buffett’s stock picking criteria . They are value stocks, with a lower-than-average forward price-to-earnings ratio of 6.8, and have an expected dividend yield that is better than their Japan-listed peers, among other qualities. Buffett acquired those stocks in August 2020 , and four of the five have more than doubled since his initial purchases. In light of those developments, Credit Suisse analysts said in the note that they’ve screened for stocks in Japan that are “Buffett-style picks” — that is, they have characteristics typical of Buffett’s holdings. The following are the screening criteria the bank used. Value: Stocks with earnings yield in the top 25% of stocks the bank screened. Quality: the return on stock is also in the top 25%, with positive free cash flow. Safety: interest payments are over three times covered. Steady dividend payout: The stocks should not have had zero dividends in the past five years. They should also have above-median dividend yield, as well as above-median five-year dividend growth and next 12-month dividend growth. Earnings yield is defined as the profit per share divided by the share price and is a common measure used by value investors like Buffett. The higher the number, the more value investors are getting per share. Eleven stocks showed up in Credit Suisse’s screen, including the five Buffett investments. These are the other six. — CNBC’s Yun Li and Sarah Min contributed to this report.
Credit Suisse screens stocks that meet Warren Buffett stock criteria
