Berkshire Hathaway, led by Warren Buffett, has made nearly $9 billion on American Express this year, bringing its total unrealized gain on the stock to $26 billion.
At the last count, the famed investor’s conglomerate owned 152 million shares of the credit-card company, valued at $27 billion as of Tuesday’s close. Buffett and his team only invested $1.3 billion in the stock, so they’ve already made a 20-fold profit on paper, excluding dividends.
On Tuesday, American Express stock closed at $177, just shy of its all-time intraday high of $180 set in July. As the US economy has recovered from the pandemic and the threat of a wave of loan defaults has faded, it has increased by 50% this year. Berkshire’s stake in the stock has increased in value by $8.6 billion this year as a result of the stock’s rise.
Berkshire Hathaway has been an American Express shareholder for over 25 years and hasn’t changed its position since 1998. Despite this, thanks to the lender’s share buybacks, its stake has grown from 11% to over 19% in that time.
Buffett has long admired American Express and has emphasized the company’s brand and customer relationships. In the mid-1960s, after the Salad Oil scandal halved the stock price, he invested 40% of his investment partnership’s capital in the company. In a letter to shareholders in 1980, he called it a “one-of-a-kind” company.
After Apple and Bank of America, American Express is Berkshire’s third-largest stock holding in the United States. Based on the cost bases detailed in Berkshire’s most recent annual report, those two stocks have risen 15 percent and 55 percent this year, bringing Berkshire’s unrealized gains on them to $100 billion and $33 billion, respectively.
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