What are the similarities and differences in the investment logic between this investment and Warren Buffett's past investments in Coca-Cola and American Express?

Similarities

• Value Investing Principles: Warren Buffett's investments in Japan's five major trading companies (Itochu, Marubeni, Mitsubishi, Mitsui, Sumitomo) follow the same value investing logic as his investments in Coca-Cola and American Express—buying high-quality companies undervalued by the market. These firms all possess strong competitive advantages (economic moats), such as Coca-Cola’s brand power, American Express’s network effects, and the global trade networks and diversified operations of the trading houses.

• Long-Term Holding Strategy: Buffett emphasizes "holding forever." These investments are based on long-term growth potential rather than short-term speculation. His stakes in Coca-Cola and American Express have spanned decades, and his investments in the trading houses are similarly intended for long-term holding to benefit from compounding and dividend returns.

• Economic Moats and Cash Flow: All three exhibit stable cash flows and defensive characteristics. Coca-Cola relies on consumer demand, American Express on its financial services network, while the trading houses achieve risk diversification and steady earnings through multi-sector operations (e.g., energy, food, metals).

• Buying at Low Valuations: Buffett seized opportunities during downturns—Coca-Cola in 1988 and American Express after the 1960s salad oil scandal. Similarly, his 2020 investment in the trading houses capitalized on undervalued Japanese stocks amid pandemic-driven market lows, despite their strong fundamentals.

Differences

• Industry and Business Models: Coca-Cola is a single-product consumer goods giant focused on beverages; American Express is a financial services firm emphasizing credit cards and premium networks; the trading houses are diversified conglomerates involved in resource trading, investments, and logistics. They profit through global supply chains rather than relying on a single product or brand, functioning more like "holding companies" than focused enterprises.

• Geographic and Market Risks: Coca-Cola and American Express are U.S.-based, benefiting from the domestic economy. The trading houses are Japanese companies exposed to yen fluctuations, inflation, and geopolitical risks (e.g., Asian supply chains). Buffett’s move here expands his international portfolio, diverging from his traditional U.S.-centric approach.

• Investment Catalysts: The Coca-Cola investment highlighted brand permanence and stable consumption habits; American Express centered on post-crisis recovery (post-salad oil scandal plunge, with Buffett betting on resilience). The trading houses investment prioritized high dividend yields (~4-5%) and robust balance sheets, driven by Japan’s corporate governance reforms and inflationary pressures—leaning more toward inflation hedging and diversification than pure brand or financial recovery.

• Valuation Methods: Coca-Cola and American Express valuations relied more on intangibles (e.g., brand value) and future growth multiples. The trading houses were valued based on tangible assets (e.g., resource investments) and current cash flows, with lower P/B ratios—reflecting Buffett’s later-stage preference for "inflation-friendly" assets.