Berkshire Hathaway (BRKA -0.75%) (BRKB -0.54%) owns a massive $354 billion portfolio with dozens of different positions. One of its top holdings, however, is American Express (AXP -0.49%), a business the Omaha-based conglomerate has held since the 1990s.
As of March 31, Berkshire Hathaway owned almost 152 million shares of the credit card giant, giving it a sizable 22.5% stake in the company. This has worked out quite well recently, as the financial stock has generated a total return of 119% in the past five years (as of Aug. 6).
Here’s what the American Express position means for individual investors.
Image source: The Motley Fool.
Warren Buffett’s stamp of approval
During his multi-decade tenure as CEO of Berkshire Hathaway, Warren Buffett oversaw capital allocation decisions that resulted in the conglomerate’s stock compounding at a jaw-dropping 19.7% annualized pace. This track record is truly special in the world of investing, mostly because of its longevity.
Buffett’s philosophy focuses on identifying great businesses and letting them compound over long periods. When he finds a company he likes, individual investors certainly take notice. The Oracle of Omaha’s stamp of approval can be a powerful signal to the rest of the market that American Express is a wonderful business that deserves a closer look.
The payments stock should make it on investors’ watch list. If it passes Buffett’s screen, then it probably possesses a wide economic moat. This is a clear indication that it’s a high-quality company. American Express has built an incredibly strong brand through its premium positioning targeting affluent customers. This boosts spending activity on the platform, while supporting industry-leading charge-off rates.
Additionally, it benefits from a network effect. Merchants can capture more sales as the number of card members grows. And these card holders have more places to shop as merchant acceptance expands.
Today’s Change
(-0.49%) $-1.69
Current Price
$340.91
Key Data Points
Market Cap
Day’s Range
$338.00 – $343.31
52wk Range
$290.97 – $387.49
Volume
1.8M
Avg Vol
3.1M
Gross Margin
59.74%
Dividend Yield
1.04%
The premium credit card brand is performing well
Investors are probably now thinking about buying American Express shares. If there’s one reason to hesitate, it might be the valuation. The stock trades at a forward price-to-earnings ratio of 19.9. This isn’t expensive, in my opinion. However, it’s definitely not a bargain, either.
But the business is performing well. During the second quarter, American Express reported net revenue of $19.6 billion, up 10% year over year. Payment volume grew at the fastest pace in three years, driven by the spending behavior of millennial and Generation Z consumers. Diluted earnings per share increased 11% compared to Q2 2025. In the long run, the management team expects this profit figure to grow at a mid-teens annualized rate.
Berkshire Hathaway’s meaningful position in this stock should at least encourage individual investors to take a closer look.
American Express is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express and Berkshire Hathaway. The Motley Fool has a disclosure policy.
