The Most Underappreciated Compounders on Earth: Japan’s Sogo Shoshas

Most people haven’t heard of them.

Even fewer understand them.

And yet, they’ve quietly been some of the most powerful, most resilient, and most influential businesses the world has ever seen.

I’m talking about Japan’s Sogo Shoshas — the general trading companies. Businesses so unique, so deeply intertwined with global trade and supply chains, that they almost operate like micro-nations. While most Western investors obsess over the next SaaS IPO or U.S.-based compounder, some of the best return-generating machines in the world are hiding in plain sight. In Tokyo.

Even Warren Buffett sees it. That alone should make people pause.

Built for Chaos. Designed to Last.

The history of the Sogo Shoshas goes back to the Meiji era, but they truly came into their own after World War II. Japan had to rebuild — fast — and these companies became the logistical backbone. They weren’t just import/export businesses. They built infrastructure, moved energy, facilitated global trade, and provided financial services to bridge the gaps between fragmented economies.

In short: they did everything.

Today, they still do. But on a global scale. Think of them as highly diversified conglomerates with hundreds of subsidiaries across every imaginable sector — energy, food, infrastructure, logistics, finance, chemicals, mining, and more.

And here’s the kicker: they operate all over the world. Latin America. Africa. Southeast Asia. North America. They’ve embedded themselves where the growth is. Where the leverage is.

A Hidden Source of Compound Growth

These businesses don’t move fast. They don’t hype themselves. They don’t scream for attention.

But under the hood, they quietly and ruthlessly reinvest their profits across the world — sometimes with decades-long timelines. They use cash flows from stable businesses to fund higher-risk, higher-return investments abroad. They hedge currency. They fund upstream and downstream projects simultaneously. They control distribution.

And most importantly, they own assets. Real assets.

You’ll rarely find this type of durability in Western markets. You won’t find it in most tech startups either. These businesses think in 20-year horizons. And yet… they’re trading at multiples that don’t make sense for what you’re getting.

I believe this is one of the biggest inefficiencies in the global public markets today.

Buffett Knows. Do You?

In 2020, Buffett shocked everyone when Berkshire Hathaway took significant stakes in five major Sogo Shoshas: Mitsubishi Corp, Mitsui & Co., Itochu Corp, Sumitomo Corp, and Marubeni Corp.

Buffett didn’t buy high-flying tech stocks. He didn’t bet on crypto. He bet on low-multiple, high-dividend, cash-flow-generating trading houses operating all over the world, with diversified revenue and strong governance.

Why?

Because these are forever businesses.

They provide exposure to hard assets, commodity flows, and emerging markets, all in one. And yet, they are also disciplined capital allocators. They cut underperforming divisions. They reinvest. They grow dividends. And they keep getting stronger over time.

My Research Journey

Over the past eight months, I’ve gone deep into the world of Sogo Shoshas.

I’ve read financial statements. Listened to earnings calls. Studied their corporate structures. Analyzed capital allocation patterns. Researched their geopolitical footprints.

And here’s where I stand:

I’m leaning heavily toward buying one — if the setup is asymmetric and the reward justifies the bet.

I don’t want exposure for the sake of it. I want life-changing returns. So I’ll wait for my pitch. But I’m close. Very close.

What’s Next?

In my next article, I’ll reveal my favorite Sogo Shosha and explain why I think it’s the most compelling bet in Japan today. If you want to get international exposure, real diversification, and tap into one of the last great value corners of the market — you’ll want to read that one.

This isn’t hype.

This is long-term, real wealth creation.

And the best part? Nobody is talking about it.

So hit that subscribe button. Follow along.

Because I’m not here to retire at 70.

I’m here to study relentlessly. To find asymmetric bets. And when I see them, to bet big.