Greg Abel's concentrated Berkshire portfolio favors closed-loop network American Express. The stock is winning young spenders with fee-based cards. Risks remain but the business model is durable.
Greg Abel has narrowed Berkshire Hathaway's stock portfolio down to 25 to 30 names. Five positions now account for roughly 68% of the equity holdings, according to the conglomerate's latest 13F filing. Apple, American Express, Coca-Cola, Bank of America and Chevron make up that core.
Abel trimmed smaller stakes to concentrate the book on businesses Warren Buffett long trusted. The move reflects a principle the pair share: own a lot of a few well-understood companies rather than a little of many. The Motley Fool recently highlighted this concentration in an analysis of the portfolio.
American Express stands apart among the five. The company runs a closed-loop network. It issues cards, processes payments and serves merchants within the same system. That structure generates a fee on nearly every transaction, reducing reliance on net interest income. The model has drawn comparison to a royalty stream rather than a traditional lender.
The customer base is tilting younger. American Express added 2.8 million new cards last quarter, the Motley Fool reported. Millennials and Gen Z make up about 65% of new consumer accounts globally. Those users are signing up for fee-charging products such as the overhauled Platinum card, which includes dining credits through Resy and Tock and a quarterly Lululemon credit.
The strategy builds a compounding revenue stream. Premium customers spend more, making the network more attractive to merchants. That funds richer rewards and draws even more affluent users. Because these cardholders tend to pay off balances each month rather than carry debt, credit losses stay low relative to peers.
No stock is bulletproof. American Express is tied to consumer spending. A sharp recession would slow transaction growth and could push charge-offs higher even among wealthier cohorts. The company also faces competition from Visa, Mastercard and fintech upstarts targeting the same demographic.
Berkshire itself carries a mixed Alpha Score of 51 out of 100, reflecting the conglomerate's slower growth profile and heavy exposure to insurance and energy. Bank of America, another core holding, scores 57. The portfolio concentration highlights Abel's bet that these five businesses will deliver durable returns through the cycle.
American Express generates fee-based revenue and a self-reinforcing network effect. That kind of moat attracted Berkshire decades ago. Abel, by keeping that position front and center, is betting the same structure will reward the next generation of shareholders.
Berkshire's next 13F filing is due by mid-August. Any change to the top-five weighting will signal whether Abel still favors such a concentrated book.
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