Warren Buffett's Berkshire Hathaway invests almost half of its $365B portfolio in just one stock.

Detailed discussion on Berkshire Hathaway's investment in American Express

Berkshire Hathaway, led by Warren Buffet, is a figurehead in the investment world. The firm's decision to take almost 50% stake on the American Express Company (AXP) displays extreme confidence.

AXP, a multinational financial services corporation, is known for its credit card, charge card, and traveler's cheque businesses.

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Buffett's investment in AXP was partly nudged by his dedication to innovative companies with strong growth potential.

Warren Buffett

As a vocal critic of cryptocurrencies, Buffett has always shown preference for traditional banking and credit card companies.

The choice to invest in AXP aligns with Buffett’s long-term investment strategy.

A demonstration of trust, Buffett’s move is a testament to AXP’s reliable track record and solid business model.

According to Yahoo Finance data, Berkshire Hathaway owns just under 151 million shares of AXP, equating to 18.8% of the total shares outstanding.

This makes Berkshire Hathaway AXP’s biggest shareholder, second only to Vanguard Group.

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Given Buffett’s investment history, his investment in AXP should not come as too much of a surprise.

In fact, it aligns closely with his well-known strategy: investing in Blue-chip stocks.

Holding their value even in bear markets, Blue-chip stocks offer solid returns and a measure of security absent from more volatile stocks, a fact that Buffett has never shied away from acknowledging.

In fact, Buffett's reputation as a value investor is well enshrined in his investment philosophy.

His investment in AXP was not a sudden decision; in fact, he has been a shareholder of the company for over two decades, testifying his confidence in the company's stability and forward-thinking approach.

From a financial standpoint, Buffett’s move is a strategic one considering AXP’s recent growth.

The company has a five-year annualized total return of 15.8%, meaning it provides a good yield when compared to the baseline of the broader market.

Additionally, AXP's forward P/E ratio is lower than the industry average, suggesting it is undervalued.

Thus, both these factors combined make AXP an attractive investment.

Notably, AXP is just one of the many investments that the Oracle of Omaha has made over the years to solidify his portfolio.

However, Berkshire Hathaway's significant stake in AXP further validates its status as a sound choice for investors.

In summary, though the investment is big, it aligns perfectly with Buffet's long-term strategic planning and belief in the power of consistent growth.