Greg Abel, the new fellow at Berkshire Hathaway – poor soul inheriting that particular kingdom – is, predictably, rather keen on Apple, American Express, Coca-Cola, and Moody’s. He says they’ll keep holding those stocks unless the world ends, or something equally inconvenient. Which, let’s be honest, is a distinct possibility. It’s comforting, in a way, to see a large institution planning for the long haul. Most of us are just trying to get through Tuesday.
American Express, in particular, is a curious case. Berkshire owns a hefty chunk – 22%, if you’re counting – bought for a little over a billion dollars. Now it’s worth, well, a lot more. Fifty-six billion, last I checked. They collected almost half a billion in dividends last year. Less than three years of dividends covers the original cost. It’s a bit like finding a twenty-dollar bill in an old coat. Pleasant, but doesn’t solve everything.
So, why American Express? It’s not magic. It’s just…efficient. They’re good at figuring out who’s likely to pay their bills, and who isn’t. Low write-off rates, they call it. It’s a surprisingly civilized way to look at debt.
A Straightforward Business, Relatively Speaking
Last year, they collected ten billion dollars in card fees. Up eighteen percent. They’re also about to jack up the Platinum Card fee to $895 a year. People will pay it, of course. We are, as a species, remarkably willing to be fleeced, as long as it comes with perks. They then turn around and spend eighteen billion on rewards. It’s a strange system, really. Giving money back to get more money. But it works.
| Metric | Fiscal 2025 |
|---|---|
| Discount Revenue | $37.4 billion |
| Net Card Fees | $10 billion |
| Service Fees and Other Revenue | $7.5 billion |
| Net Interest Income | $17.2 billion |
| Total Provisions For Credit Losses | ($5.3 billion) |
| Card Member Rewards | ($18.4 billion) |
| Business Development | ($6.5 billion) |
| Card Member Services | ($6.1 billion) |
| Marketing | ($6.25 billion) |
| Operating Expenses | ($16 billion) |
| Income Tax Provision | ($3 billion) |
| Net Income Attributable to Common Shareholders | $10.7 billion |
They make their money, primarily, from the fees merchants pay to process transactions. Not so much from what you pay. It’s a subtle distinction, but important. It’s a system built on moving money around. Which, come to think of it, is pretty much everything.
Steady, If You Can Call It That
American Express saw a ten percent increase in revenue last year. Fifteen percent in earnings. They buy back stock, pay dividends. Berkshire, naturally, benefits. It’s a neat little cycle. A well-oiled machine, humming along. It’s almost…comforting. Almost.
The price-to-earnings ratio is around nineteen and a half. Forward P/E is seventeen point two. The ten-year median is seventeen point eight. It’s not a screaming bargain, but it’s not ridiculous either. It’s…reasonable. And in these times, reasonable is a rare and precious commodity.
So, American Express. It’s not going to solve world hunger. It’s not going to bring about lasting peace. But it’s a solid company. A decent bet. And in the grand scheme of things, that’s about all anyone can ask for. So it goes.
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2026-03-19 13:22