Better Warren Buffett Stock: Visa vs. American Express

Core Insights - Warren Buffett has a long-standing preference for American Express, which is a significant part of Berkshire Hathaway's portfolio, accounting for 15.2% of total holdings and 21.5% of outstanding shares [1][2] Group 1: Company Overview - American Express operates on a "closed loop" model, acting as its own bank, which allows it to have a broader business base compared to Visa [6][8] - Visa, as the largest credit card network, has 4.5 billion cards in circulation and primarily functions as a payment gateway, relying on partnering banks for credit [5][6] Group 2: Financial Performance - American Express generates nearly double the total sales of Visa, despite having a smaller cardmember base of about 150 million cards [9][10] - Visa has higher profit margins due to its lower operational costs and lack of credit risk exposure, resulting in a net income of $19.74 billion compared to American Express's $9.892 billion [10][11] Group 3: Investment Performance - Over the long term, Visa has been a better investment, with a total return of 412.0%, while American Express has a total return of 277.0% [12] - In recent years, American Express has shown strong performance, achieving a total return of 167.6% compared to Visa's 77.58% [13] Group 4: Investor Sentiment - Buffett's preference for American Express is based on its differentiated business model and ability to attract quality, fee-paying cardmembers, making it a more appealing investment choice [13]