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Bloomberg Killers
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April 4, 2025 at 10:44 AM
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March 19, 2025 at 5:14 PM
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Even though Buffett’s investment was a massive success, Buffett sold his AMEX stock in 1968.
It has since multiplied another 17x, returning a 10.77% CAGR in the last 20 years.
Buffett eventually bought back into AMEX in 1998 and now owns ~21% of the company.
It has since multiplied another 17x, returning a 10.77% CAGR in the last 20 years.
Buffett eventually bought back into AMEX in 1998 and now owns ~21% of the company.
March 19, 2025 at 5:12 PM
Even though Buffett’s investment was a massive success, Buffett sold his AMEX stock in 1968.
It has since multiplied another 17x, returning a 10.77% CAGR in the last 20 years.
Buffett eventually bought back into AMEX in 1998 and now owns ~21% of the company.
It has since multiplied another 17x, returning a 10.77% CAGR in the last 20 years.
Buffett eventually bought back into AMEX in 1998 and now owns ~21% of the company.
By early 1968, AMEX's EPS doubled from $2.29 to $4.61 and its multiple expanded from 17.5X to 43.4X.
Buffett's $40 stock was now worth $200.
Over four years, AMEX compounded at 50% - producing a 5X return.
“That was the best investment I ever made in my partnership years.”
Buffett's $40 stock was now worth $200.
Over four years, AMEX compounded at 50% - producing a 5X return.
“That was the best investment I ever made in my partnership years.”
March 19, 2025 at 5:12 PM
By early 1968, AMEX's EPS doubled from $2.29 to $4.61 and its multiple expanded from 17.5X to 43.4X.
Buffett's $40 stock was now worth $200.
Over four years, AMEX compounded at 50% - producing a 5X return.
“That was the best investment I ever made in my partnership years.”
Buffett's $40 stock was now worth $200.
Over four years, AMEX compounded at 50% - producing a 5X return.
“That was the best investment I ever made in my partnership years.”
Long-term Impact
As Buffett predicted, how AMEX handled the scandal added to AMEX’s stature.
Even though AMEX wasn’t responsible for the scandal, they paid out the creditors.
Post - scandal EPS growth improved from low- to high-teens, and AMEX joined the NIFTY FIFTY list of highly-valued stocks
As Buffett predicted, how AMEX handled the scandal added to AMEX’s stature.
Even though AMEX wasn’t responsible for the scandal, they paid out the creditors.
Post - scandal EPS growth improved from low- to high-teens, and AMEX joined the NIFTY FIFTY list of highly-valued stocks
March 19, 2025 at 5:12 PM
Long-term Impact
As Buffett predicted, how AMEX handled the scandal added to AMEX’s stature.
Even though AMEX wasn’t responsible for the scandal, they paid out the creditors.
Post - scandal EPS growth improved from low- to high-teens, and AMEX joined the NIFTY FIFTY list of highly-valued stocks
As Buffett predicted, how AMEX handled the scandal added to AMEX’s stature.
Even though AMEX wasn’t responsible for the scandal, they paid out the creditors.
Post - scandal EPS growth improved from low- to high-teens, and AMEX joined the NIFTY FIFTY list of highly-valued stocks
Here’s what happened as Buffett invested in Q1 1964:
• A law change ended the assessment risk.
• The $210M liability fell to $145M.
• AMEX offered $58M to settle.
Buffett admitted, “It was hard to tell how it would end,” but he expected a $60-100M payment.
• A law change ended the assessment risk.
• The $210M liability fell to $145M.
• AMEX offered $58M to settle.
Buffett admitted, “It was hard to tell how it would end,” but he expected a $60-100M payment.
March 19, 2025 at 5:12 PM
Here’s what happened as Buffett invested in Q1 1964:
• A law change ended the assessment risk.
• The $210M liability fell to $145M.
• AMEX offered $58M to settle.
Buffett admitted, “It was hard to tell how it would end,” but he expected a $60-100M payment.
• A law change ended the assessment risk.
• The $210M liability fell to $145M.
• AMEX offered $58M to settle.
Buffett admitted, “It was hard to tell how it would end,” but he expected a $60-100M payment.
Then he bought AMEX for Berkshire.
In late 1966, Buffett invested $1M of Berkshire's excess cash into AMEX at $71 a share.
It was one of the first stocks he bought for Berkshire.
And it was the company's largest holding, accounting for 28% of the portfolio.
In late 1966, Buffett invested $1M of Berkshire's excess cash into AMEX at $71 a share.
It was one of the first stocks he bought for Berkshire.
And it was the company's largest holding, accounting for 28% of the portfolio.
March 19, 2025 at 5:12 PM
Then he bought AMEX for Berkshire.
In late 1966, Buffett invested $1M of Berkshire's excess cash into AMEX at $71 a share.
It was one of the first stocks he bought for Berkshire.
And it was the company's largest holding, accounting for 28% of the portfolio.
In late 1966, Buffett invested $1M of Berkshire's excess cash into AMEX at $71 a share.
It was one of the first stocks he bought for Berkshire.
And it was the company's largest holding, accounting for 28% of the portfolio.
Where others saw uncertainty, Buffett saw an opportunity.
He wasn’t just buying a stock—he was betting that trust in AMEX was unshakable
He worked "tirelessly to get as much as he could," and by June he owned 70,000 shares at a $40 basis.
AMEX cost $2.8M and consumed 16% of BPL's capital.
He wasn’t just buying a stock—he was betting that trust in AMEX was unshakable
He worked "tirelessly to get as much as he could," and by June he owned 70,000 shares at a $40 basis.
AMEX cost $2.8M and consumed 16% of BPL's capital.
March 19, 2025 at 5:12 PM
Where others saw uncertainty, Buffett saw an opportunity.
He wasn’t just buying a stock—he was betting that trust in AMEX was unshakable
He worked "tirelessly to get as much as he could," and by June he owned 70,000 shares at a $40 basis.
AMEX cost $2.8M and consumed 16% of BPL's capital.
He wasn’t just buying a stock—he was betting that trust in AMEX was unshakable
He worked "tirelessly to get as much as he could," and by June he owned 70,000 shares at a $40 basis.
AMEX cost $2.8M and consumed 16% of BPL's capital.
Best of all: AMEX had float.
Customers paid AMEX cash upfront for traveler's checks, but a check didn't return to the company for payment until about 45 days after it was issued.
During that 45-day window, AMEX invested the cash.
Float was AMEX's "real profit center."
Customers paid AMEX cash upfront for traveler's checks, but a check didn't return to the company for payment until about 45 days after it was issued.
During that 45-day window, AMEX invested the cash.
Float was AMEX's "real profit center."
March 19, 2025 at 5:12 PM
Best of all: AMEX had float.
Customers paid AMEX cash upfront for traveler's checks, but a check didn't return to the company for payment until about 45 days after it was issued.
During that 45-day window, AMEX invested the cash.
Float was AMEX's "real profit center."
Customers paid AMEX cash upfront for traveler's checks, but a check didn't return to the company for payment until about 45 days after it was issued.
During that 45-day window, AMEX invested the cash.
Float was AMEX's "real profit center."
That "special position" gave AMEX pricing power.
Traveler's checks? AMEX charged 33bps vs the banks' 10-0bps.
Card membership? AMEX charged $5 vs the competition’s $3-0.
Card acceptance? AMEX charged 4% vs a market discount rate of 3-2%.
AMEX even raised prices during the scandal.
Traveler's checks? AMEX charged 33bps vs the banks' 10-0bps.
Card membership? AMEX charged $5 vs the competition’s $3-0.
Card acceptance? AMEX charged 4% vs a market discount rate of 3-2%.
AMEX even raised prices during the scandal.
March 19, 2025 at 5:12 PM
That "special position" gave AMEX pricing power.
Traveler's checks? AMEX charged 33bps vs the banks' 10-0bps.
Card membership? AMEX charged $5 vs the competition’s $3-0.
Card acceptance? AMEX charged 4% vs a market discount rate of 3-2%.
AMEX even raised prices during the scandal.
Traveler's checks? AMEX charged 33bps vs the banks' 10-0bps.
Card membership? AMEX charged $5 vs the competition’s $3-0.
Card acceptance? AMEX charged 4% vs a market discount rate of 3-2%.
AMEX even raised prices during the scandal.
Buffett didn’t trust Wall Street’s panic.
Instead, he visited restaurants and places that took AMEX cards and traveler’s checks.
His verdict: "The tarnish of Wall St. had not spread to Main St."
AMEX's "special position” in people's minds about financial integrity survived.
Instead, he visited restaurants and places that took AMEX cards and traveler’s checks.
His verdict: "The tarnish of Wall St. had not spread to Main St."
AMEX's "special position” in people's minds about financial integrity survived.
March 19, 2025 at 5:12 PM
Buffett didn’t trust Wall Street’s panic.
Instead, he visited restaurants and places that took AMEX cards and traveler’s checks.
His verdict: "The tarnish of Wall St. had not spread to Main St."
AMEX's "special position” in people's minds about financial integrity survived.
Instead, he visited restaurants and places that took AMEX cards and traveler’s checks.
His verdict: "The tarnish of Wall St. had not spread to Main St."
AMEX's "special position” in people's minds about financial integrity survived.
But here’s the thing—AMEX was an established financial powerhouse.
Half a billion dollars of its traveler’s checks floated around the world. Its credit card business was booming.
The company’s true value was its brand.
American Express sold trust.
Half a billion dollars of its traveler’s checks floated around the world. Its credit card business was booming.
The company’s true value was its brand.
American Express sold trust.
March 19, 2025 at 5:12 PM
But here’s the thing—AMEX was an established financial powerhouse.
Half a billion dollars of its traveler’s checks floated around the world. Its credit card business was booming.
The company’s true value was its brand.
American Express sold trust.
Half a billion dollars of its traveler’s checks floated around the world. Its credit card business was booming.
The company’s true value was its brand.
American Express sold trust.
AMEX faced a liability of unknown and potentially massive proportions.
Worse, since it was a joint stock association, shareholders could “get assessed”—making them personally liable.
Stockholders exited as uncertainty fueled panic
Worse, since it was a joint stock association, shareholders could “get assessed”—making them personally liable.
Stockholders exited as uncertainty fueled panic
March 19, 2025 at 5:12 PM
AMEX faced a liability of unknown and potentially massive proportions.
Worse, since it was a joint stock association, shareholders could “get assessed”—making them personally liable.
Stockholders exited as uncertainty fueled panic
Worse, since it was a joint stock association, shareholders could “get assessed”—making them personally liable.
Stockholders exited as uncertainty fueled panic
To make matters worse, President Kennedy had just been shot.
In the chaos that followed, the stock market crashed.
The panic grew so intense that the exchange shut down—its first mid-day closure since the Great Depression.
In the chaos that followed, the stock market crashed.
The panic grew so intense that the exchange shut down—its first mid-day closure since the Great Depression.
March 19, 2025 at 5:12 PM
To make matters worse, President Kennedy had just been shot.
In the chaos that followed, the stock market crashed.
The panic grew so intense that the exchange shut down—its first mid-day closure since the Great Depression.
In the chaos that followed, the stock market crashed.
The panic grew so intense that the exchange shut down—its first mid-day closure since the Great Depression.
When the news broke, AMEX’s stock price crashed—by more than 40%.
This became notorious as the Salad Oil Scandal.
This became notorious as the Salad Oil Scandal.
March 19, 2025 at 5:12 PM
When the news broke, AMEX’s stock price crashed—by more than 40%.
This became notorious as the Salad Oil Scandal.
This became notorious as the Salad Oil Scandal.
On December 2, 1963 - the WSJ broke a story about fraud at an AMEX subsidiary.
American Express Warehousing, Ltd. was supposed to have $150 million in vegetable oil as collateral but they were duped by a conman.
They had inventories worth only $6 million
American Express Warehousing, Ltd. was supposed to have $150 million in vegetable oil as collateral but they were duped by a conman.
They had inventories worth only $6 million
March 19, 2025 at 5:12 PM
On December 2, 1963 - the WSJ broke a story about fraud at an AMEX subsidiary.
American Express Warehousing, Ltd. was supposed to have $150 million in vegetable oil as collateral but they were duped by a conman.
They had inventories worth only $6 million
American Express Warehousing, Ltd. was supposed to have $150 million in vegetable oil as collateral but they were duped by a conman.
They had inventories worth only $6 million
Things had never looked rosier for AMEX than they did in November 1963.
Traveler's checks. Charge cards. Earnings. The stock. Everything was growing by leaps and bounds.
AMEX wasn’t just another company. It was a cornerstone of American commerce, handling millions in transactions globally.
Traveler's checks. Charge cards. Earnings. The stock. Everything was growing by leaps and bounds.
AMEX wasn’t just another company. It was a cornerstone of American commerce, handling millions in transactions globally.
March 19, 2025 at 5:12 PM
Things had never looked rosier for AMEX than they did in November 1963.
Traveler's checks. Charge cards. Earnings. The stock. Everything was growing by leaps and bounds.
AMEX wasn’t just another company. It was a cornerstone of American commerce, handling millions in transactions globally.
Traveler's checks. Charge cards. Earnings. The stock. Everything was growing by leaps and bounds.
AMEX wasn’t just another company. It was a cornerstone of American commerce, handling millions in transactions globally.
4. The 10 largest companies in the index trade at 27x earnings, compared to 20x for the other 490 companies
February 17, 2025 at 4:52 PM
4. The 10 largest companies in the index trade at 27x earnings, compared to 20x for the other 490 companies
3. The 10 largest companies in the S&P 500 accounted for nearly 40% of the total market capitalization of the index - The highest it has ever been!
February 17, 2025 at 4:52 PM
3. The 10 largest companies in the S&P 500 accounted for nearly 40% of the total market capitalization of the index - The highest it has ever been!
2. The S&P 500 Equal Weight Index has significantly underperformed the S&P 500 in the last 2 years due to outsized returns from the tech rally
February 17, 2025 at 4:52 PM
2. The S&P 500 Equal Weight Index has significantly underperformed the S&P 500 in the last 2 years due to outsized returns from the tech rally