Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) owns a massive $354 billion portfolio with dozens of different positions. One of its top holdings, however, is American Express (NYSE: AXP), a business the Omaha-based conglomerate has held since the 1990s.<\/p>\n
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).<\/p>\n
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Here's what the American Express position means for individual investors.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
Berkshire Hathaway's meaningful position in this stock should at least encourage individual investors to take a closer look.<\/p>\n
Before you buy stock in\u00a0American Express, consider this:<\/p>\n
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