Did Greg Abel Already Make His First Big Mistake as Berkshire Hathaway CEO?

Berkshire Hathaway's American Express stake has risen to roughly 24%, worth $49.2 billion, primarily because AmEx reduced its share count by nearly 59% since Berkshire completed its purchases in 1995. AmEx forecasts 10% revenue growth in 2026 and trades at a 16.3 forward P/E, versus roughly 25 for Visa and Mastercard, despite higher advertising and rewards costs pressuring gross margins. Berkshire's decision to retain AmEx while exiting Visa and Mastercard signals continued confidence in the closed-loop card issuer as a long-term compounder.

Analysis

The relevant valuation question is not whether AXP deserves to converge fully to V/MA, but whether its credit-cycle risk is being over-discounted relative to its affluent-cardmember mix and recurring fee economics. AXP’s incremental marketing and rewards investment creates a near-term operating-leverage headwind, so revenue growth alone will not rerate the shares; the 1-3 month catalyst is evidence that new-account cohorts sustain spend and renewal rates without pushing rewards intensity higher. AXP can outperform on stable consumer data, while V/MA remain the cleaner beneficiaries if spending decelerates because their issuer partners absorb credit losses.

Berkshire’s ownership concentration is a double-edged technical. Continued buybacks shrink effective float and can support EPS and downside liquidity, but Berkshire is already too large a holder to be a credible incremental buyer; the stock should not receive a durable “Abel premium” absent operating delivery. The more actionable read-through is that BRK’s portfolio has reduced direct exposure to payment-network multiples: any AXP-specific disappointment now risks forcing generalist holders back toward V/MA rather than creating a forced Berkshire sale.

Consensus may be too focused on the headline P/E discount and too little on capital intensity. AXP’s multiple can remain structurally below V/MA if receivables growth, reserve build, or funding costs consume capital that would otherwise be returned. Over 6-18 months, the bull case requires credit performance and premium-card retention to prove that customer-acquisition spending is producing durable lifetime value, not merely purchased volume.

Key Decisions for Investors

• Initiate a 1-3 month relative-value position: long AXP / short V in dollar-neutral size only after AXP reports stable delinquency and net write-off trends alongside maintained expense guidance. Target 8-12% relative upside if the execution discount narrows; exit if AXP cuts EPS guidance or credit costs accelerate materially.
• Do not treat Berkshire’s unchanged holding as a standalone AXP catalyst. Maintain BRK.B as a diversified quality-financial exposure, but separate it from the AXP thesis; an AXP drawdown is unlikely to be material enough to impair BRK’s valuation absent broader consumer-credit stress.
• For a 6-12 month catalyst trade, monitor quarterly cardmember acquisition cost, rewards expense as a percentage of billed business, and receivables growth versus write-offs. Buy AXP only if these show improving cohort economics; otherwise prefer V/MA for payments exposure with lower balance-sheet sensitivity.
• Use a consumer-credit deterioration alert rather than a directional short: rising AXP reserve provisioning or a meaningful adverse shift in affluent-consumer spending would favor short AXP versus long V/MA, as the closed-loop model converts macro weakness into both lower transaction activity and higher credit costs.