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Berkshire Hathaway vs. American Express



<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Twice in the past, I've arbitrated a competition between two heavyweights: Warren Buffett's investment vehicle Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) and giant payment cards American Express (NYSE: AXP). "data-reactid =" 11 "> Twice in the past, I officiated in a competition between two heavyweight events: Warren Buffett's investment vehicle Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) and giant payment cards American Express (NYSE: AXP).

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Although I'm a fan of both companies, in each of two previous instances I chose Berkshire Hathaway as the best investment. However, as we all know, times are changing, as are businesses. "Data-reactid =" 12 "> Although I am a fan of both companies, in each of the two previous cases, I chose Berkshire Hathaway as best, and as we all know, times are changing, as are companies.

Will a new contest be a third chance for AmEx?

Berkshire Hathaway by Warren Buffett has already won two victories against American Express. Can he complete a scan? Source of the image: The Fool Motley.

AmExcelling

<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Cash transactions are going fast in the direction of the dodo, in favor of payment cards and digital transactions.There is no doubt on the side that will win The War on Cash (tip: the latter) .This is a boon to all payment card companies, and AmEx is no exception. "data-reactid =" 27 "> Cash transactions are moving fast in the direction of the dodo, in favor of payment cards and digital transactions.There is no doubt on the side that will win The War on Cash (index: The latter has been a boon to all payment card companies and AmEx is no exception.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The company is a little outlandish in the big plastics because it has always been presented to richer card holders, unlike the big brands – and the eternal rivals – Visa& nbsp; and MasterCard. Intelligently, in recent years, AmEx has enhanced the benefits of its cards and improved its Membership Rewards loyalty program. This keeps these "sticky" cards and their owners eager to use them. "Data-reactid =" 28 "> The company is a little outlandish in the big plastic, because it has always been intended for richer card holders, unlike the big brands – – and eternal rivals – Visa and MasterCard. Intelligently, in recent years, AmEx has enhanced the benefits of its cards and improved its Membership Rewards loyalty program. This keeps these "sticky" cards and their owners wanting to use them.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Marked by the loss of its exclusivity in 2016 as only credit card accepted at Costco wholesaleAmEx has done a good job in signing new co-branding agreements. New partners since this stinging defeat include Amazon.com& nbsp; and brokerage Charles Schwab"data-reactid =" 29 "> Marked by the loss of its exclusivity in 2016, unique credit card accepted at Costco wholesaleAmEx has done a good job in signing new co-branding agreements. New partners since this stinging defeat include Amazon.com and brokerage Charles Schwab.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "AmEx is do well by maintaining its high-end payment card position. This strategy, combined with the inexorable rise of payment cards and other types of non-monetary transactions, makes it possible to fully extract profits and profits. & Nbsp; "data-reactid =" 30 "> AmEx retains its position as a final Payment Card: this strategy, combined with the inexorable increase in payment cards and other types of transactions other than cash, makes it easy to distinguish the most favorable results.

Believe in Berkshire

Berkshire Hathaway is undoubtedly best known for his stock portfolio, a powerful collection of mostly famous companies (like AmEx, by the way). Over the many years of the company's existence, its portfolio has reached an estimated market value of $ 211 billion.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "That alone would be a reason for look seriously at Berkshire stock. But this business is a unique animal. "Data-reactid =" 33 "> This is only reason enough to look closely at the Berkshire stock, but this company is a unique animal.

Berkshire has two other powerful revenue streams: another portfolio consisting of privately held companies that are not traded on the stock exchange (such as See's Candies and the BNSF freight railroad operator) and the industry. insurance growing steadily.

These two are fine, thank you very much. Together, their incomes have increased slightly (well, if you can consider it means "adding more than $ 2 billion") between the first quarter of 2018 and the first quarter of 2019 to reach nearly $ 60.7 billion in the last quarter . In total, they reported net income of over $ 21.6 billion for the period.

Few companies can boast of having a sleight of hand for large and productive asset groups. Berkshire is a beautifully designed business – even in the unlikely event that these well-managed insurance operations have a challenging quarter / year, equity holdings will certainly offset it, at the very least.

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "It is also built to last. Private companies are generally reliable and earn money for a long time, and the stock portfolio is of high quality even though all its components are not excellent for the time being. "data-reactid =" 37 "> It is also built to last.The insurance sector will never go out of style, private companies are generally reliable and earn long-standing money, and the portfolio of the company is well-established. stock is of high quality, even if all its components are excellent at the moment.

And the winner is…

AmEx has the right goal at the right time. Most of the time, the global economy is still on the rise, so it's wise to invest in the benefits and rewards that drive cardholders to spend more. Following this strategy should allow the company to continue to grow at the high rates it has recently posted.

This is not Berkshire Hathaway, however. To be fair, no business is. Berkshire is one of the revenue generators, a trait that filters into the stellar returns it has been providing to shareholders for many years. Buffett will not be here forever, but the brilliant business model he's designed will almost certainly be. And that will make shareholders more happy and richer. As before, I choose Berkshire as my winner here.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 45 "> More from The Motley Fool

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Eric Volkman has no position in any of the actions mentioned. Motley Fool owns shares and recommends Amazon, Berkshire Hathaway (B shares), Mastercard and Visa. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy."data-reactid =" 53 ">John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Eric Volkman has no position in any of the mentioned actions. Motley Fool owns shares and recommends Amazon, Berkshire Hathaway (B shares), Mastercard and Visa. The Motley Fool recommends Costco Wholesale. Motley Fool has a disclosure policy.


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