The sōgō shōsha – giant conglomerates operating in – and just as significantly out of – Japan – have been known as international trading houses, extremely diversified and supporting Japanese manufacturers' international transactions, particularly in the textile and chemical industries in the early years of expansion
As these manufacturers grew in size, taking on an active role in international procurement and finance, the sōgō shōsha shifted their focus by investing upstream, relying on their deep knowledge of the numerous supply chains they used to trade – with the intent to consolidate their comparative advantage
The investment strategy of the firms spun a dense network of approx. 6 000 subsidiaries, mostly by way of minority holdings, across the world, growing in influence by dint of shared technological expertise and financial power
Utilities, always an integral part of the supply chains, brought infrastructure investment into focus, on the domestic market and internationally, extending the reach of the conglomerates from equipment to research (such as water desalination) to consumer services
Water utilities are a case in point, with concentration on emerging markets (Middle East, Latin America and South East Asia), where industrialization, urbanization and growing middle classes will fast-track growth
In a long-term perspective, the investment of Berkshire
The sōgō shōsha in Berkshire's portfolio are Itochu
Not coincidentally, two sōgō which are not part of Berkshire's portfolio seem to be ignored by international investors and remain poorly traded OTC - $22 billion Toyota Tsuho
Three large industrial companies are included in the selection as benchmarks - industrial machinery manufacturer Keyence
Since the companies are often very loosely traded on OTC markets, their performance will usually reflect the trend but not the actual performance on their home market, adjusted for currency shifts - their track record on OTC is strictly informative and will justify further research
With low trading volume on U.S. OTC markets for the listed shares, performance, volatility and drawdown calculations will be affected - these ratios do not reflect true performance, volatility and drawdown as these same shares are normally traded on their national exchange
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