Berkshire Hathaway's portfolio overhaul under Greg Abel highlights American Express as a top buy, despite recent margin pressure and underperformance relative to the S&P 500.
Despite margin compression and lagging returns, the article argues American Express is the best buy among Berkshire's core holdings at 19.7x earnings.
Berkshire Hathaway is the parent company whose portfolio composition is the subject of the article.
Alphabet is a top-five Berkshire holding mentioned as an example of Abel's portfolio overhaul.
Apple is one of Berkshire's core long-term holdings, mentioned without direct recommendation.
Coca-Cola is one of Berkshire's top holdings, mentioned as a compounding long-term investment.
Moody's is one of Berkshire's core holdings, mentioned without specific commentary.
Bank of America is one of Berkshire's largest positions, mentioned as part of the 75% concentration.
Chevron is one of Berkshire's core holdings, mentioned as part of the portfolio breakdown.
Occidental Petroleum is a Berkshire holding, part of the concentrated 75% stake.
The S&P 500 is used as the benchmark to compare American Express's underperformance.
Visa is mentioned as a pure-play payment processor that may be less vulnerable than American Express.
Mastercard is mentioned as a pure-play payment processor less exposed to credit risk than American Express.
Mitsubishi is a Berkshire holding via OTC tickers, mentioned only in the portfolio breakdown.
Nvidia appears only in a promotional segment as a prior stock recommendation example, not directly relevant.
Berkshire Hathaway CEO Greg Abel has consolidated 75% of the firm's equity portfolio into eight core holdings. While most have outperformed the S&P 500, American Express currently lags behind due to margin compression from high reward costs. Despite this, the stock trades at 19.7x earnings, presenting a compelling entry point for long-term investors.
American Express is facing margin pressure because its consolidated expenses, driven by generous cardholder rewards and marketing, are currently outpacing revenue growth.
Unlike Visa and Mastercard, which are pure-play payment processors, American Express acts as both a processor and a card issuer, meaning it bears direct credit risk for its cardholders.