3. American Express Company (NYSE:AXP)
Berkshire Hathaway’s Stake Value: $35,105,457,585
Sector: Financials
Industry: Credit Services
American Express Company (NYSE:AXP) is an American multinational bank holding and financial services company. The stock is up by nearly 31% since the start of 2024 despite investors’ concerns about slowing consumer spending and the increasing rates of charge-offs and delinquencies in the banking sector. The company gains from significant network effects. Since the end of 2021, it has substantially expanded its operations, boosting revenues by nearly 50 percent and increasing Card Member spending by almost 40 percent. Additionally, it has issued approximately 23 million new cards and expanded to over 30 million merchant locations. In the second quarter of 2024, the company reported revenue of $16.3 billion, up 8.50% from the same period last year. The growth was mainly driven by higher net interest income, increased Card Member spending, and continued strong growth in card fees.
Artisan Partners highlighted the company’s strong business momentum in its Q1 2024 investor letter. Here is what the firm has to say about American Express Company (NYSE:AXP):
“American Express Company (NYSE:AXP) shares rose 22% this quarter. This is an interesting case study given our earlier discussion about inflation. American Express operates one of the largest credit card networks in the world. Its revenue is largely a function of a fee rate applied to the dollar value of goods and services that are transacted through its network. That dollar value is, of course, nominal. As inflation pushes up the value of those goods and services as it has for the past few years, American Express will capture that value through its fee structure. The past few years inflation has clearly been a benefit. Aside from its inherent inflation protection, the business is a very strong one. Payments continue to shift toward electronic forms, benefiting American Express. It also has a strong brand that attracts loyal and highly profitable customers that are the envy of the industry. Recent results have been strong with revenues moving nicely ahead of GDP.”
Buffett began investing in American Express Company (NYSE:AXP) in 1991 by purchasing preferred stock, which he later converted to common stock in 1994. The hedge fund did not change its position in the company during the second quarter of 2024 and owned nearly 152 million AXP shares, worth over $35 billion. The company made up 12.53% of Warren Buffett’s portfolio.
American Express Company (NYSE:AXP), one of the best Warren Buffett dividend stocks, raised its payouts twice this year. Currently, it offers a quarterly dividend of $0.70 per share and has a dividend yield of 1.14%, as of August 21.
The number of hedge funds tracked by Insider Monkey owning stakes in American Express Company (NYSE:AXP) grew to 68 in Q2 2024, from 66 a quarter earlier. The collective value of these stakes is over $38.4 billion. Fisher Asset Management was one of the company’s leading stakeholders in Q2.
