Market observers say that Warren Buffett, known as the 'Oracle of Omaha,' may be considering acquiring Japanese financial and shipping companies, as Berkshire Hathaway's return to the Japanese bond market has sparked speculation that he is raising funds to build a value stock portfolio.

The billionaire's company has commissioned banks this week to manage yen bond sales in global markets, indicating that he may be increasing his holdings in Japan. Buffett stated in his annual letter in February that most of his previous investments in Japanese stocks were financed through yen bonds.

Berkshire Hathaway has hired Bank of America Securities and SMBC Nikko Securities to issue yen-denominated senior unsecured bonds. The company has been a regular issuer of yen notes since 2019, with the last issuance of such bonds in April. The company's fundraising plan is closely watched by stock market investors, as Buffett's previous purchase of shares in Japanese trading companies helped boost the Nikkei 225 index to a historic high.

Eiji Kinouchi, Chief Technical Analyst at Daiwa Securities, believes that insurance and shipping companies have the potential to be Buffett's next targets.

In a research report this week, he wrote that although trading companies rose after the bond sale news, they did not significantly outperform the market. On the other hand, shipping and insurance stocks have been the biggest gainers in the Tokyo Stock Exchange index since August, possibly fitting Buffett's value investing strategy.

"If it's not a trading company, it would have a significant impact on the entire market," Kinouchi said.

Known as the 'Oracle of Omaha,' Buffett's return to the Japanese market could boost the Japanese stock market, as his endorsement of the five major trading companies earlier this year helped the Nikkei 225 index reach a historic high.

If Berkshire expands its investment scope to other industries in the Japanese stock market, it will become a supporting factor for the market, which has recently experienced significant volatility due to political uncertainty and currency fluctuations. Berkshire did not immediately respond to requests for comments.

In terms of the US stock market, Buffett continues to reduce his stake in Bank of America, but the pace has slowed down, with selling prices hitting the lowest level since he began significant share sales in mid-July.

According to Wednesday's filings, Berkshire Hathaway sold $0.338 billion worth of Bank of America stocks, with an average reduced price of $39.4 per share on Tuesday and Wednesday. This is already their 13th round of share sales, with an average reduction size of around $0.75 billion per round over the past few months, usually lasting three days.

At the age of 94 this year, Buffett did not explain why he reduced his stake in Bank of America. Berkshire Hathaway remains the largest shareholder of Bank of America, still holding 10.2% of the shares, valued at over $31 billion.

After a significant sell-off in the broader market in August, the valuations of Japanese banks and insurance companies have declined. The TOPIX insurance and bank index have respective expected PEs of 9 and 10.1, compared to 12.1 and 12.4 at the beginning of July when the broader index hit historical highs.

Nomura Securities' senior strategist Takashi Ito also stated that Buffett is very likely to buy financial stocks. 'The foundation of the Japanese financial industry is very strong, which meets Buffett's standards,' he said.

Nomura Securities analysts, including Tomochika Kitaoka, found through stock screening that financial companies such as Mitsubishi UFJ Financial Group, Sumitomo Mitsui Trust Holdings, and Sompo Holdings meet the characteristics of Berkshire's investment portfolio.

Ito stated that a shift in the Bank of Japan's policy towards an interest rate hike will increase profitability in the industry.

Nevertheless, some Buffett observers expect that, given Berkshire recently sold shares of Bank of America, he will continue to focus on trading companies.

"I think he won't buy shares of Japanese banks when he's selling Bank of America stocks, because the U.S. market is a market he knows very well," said Mineo Bito, President and CEO of Bito Financial Services. He often attends the Berkshire Hathaway shareholders' meeting held in Omaha, Nebraska.