Berkshire Hathaway Sticks with American Express Amid Underperformance

Greg Abel, the newly appointed CEO of Berkshire Hathaway, has made some significant changes to the company's portfolio since taking over on January 1. One of the most notable decisions was selling stakes in Visa and Mastercard, two smaller holdings acquired more recently, and increasing the position in Alphabet, which is now a core holding.

This move may seem counterintuitive given American Express' underperformance compared to its peers year-to-date. However, context is crucial in understanding Abel's decision-making process. American Express is Berkshire's second-largest holding, behind Apple, due to a combination of its rising stock price and aggressive buybacks.

The company has reduced its share count by almost 59% over the past 31 years, with Berkshire owning roughly 24% of the entire company thanks to these buybacks. This position is worth $49.2 billion, making American Express a significant holding in the portfolio.

Abel's decision to continue holding American Express was likely influenced by its strong fundamentals and excellent business model. The company has generated all-time high revenue and earnings and forecasts 10% year-over-year revenue growth in 2026. While expenses are on the rise, these costs could pay off if they help attract and retain high-quality customers.