American Express CEO Shares Insights on Warren Buffett’s Investing Magic

Stephen Squeri, CEO of American Express, talks about his first meeting with Warren Buffet, and how it was "very intimidating". After five years into his tenure as the head of AmEx, Squeri came to understand Buffet's business and investing magic. He realized that Buffet's focus on long-term investments has led to his being a very long-term investor in AmEx. Squeri shares how Buffet’s unbridled focus on the long term has given him the freedom to test his ideas as CEO.

The Privilege of Access to Warren Buffett:

Stephen Squeri, CEO of American Express, considers having a direct line to legendary investor and top AmEx shareholder Warren Buffett as a "privilege." It’s a privilege that Squeri sees as a contrast to his first meeting with Buffett many years ago, which he found "very intimidating."

Understanding Buffett's Business and Investing Magic:

Five years into his tenure as the head of AmEx, Squeri gained a fuller understanding of Buffet's business and investing magic. He saw Buffet’s focus on long-term investments as leading to his being a very long-term investor in AmEx.

Buffet’s Approach:

Buffett’s approach to investing involves looking for good, sustainable businesses and disregarding the peaks and valleys of the market. His focus on the long to medium term has enabled him to make the right decisions for the business.

The Benefit of Buffett’s Long-Term Horizon:

Buffett's long-term horizon has allowed Squeri more "freedom" to test his ideas as CEO, without fear of the rebuke that often comes from investors more focused on the short term.

The Future of AmEx After Buffett:

Squeri is not worried that the Buffett magic will fade once the veteran investor steps aside as Berkshire Hathaway CEO and hands the reins to likely successor Greg Abel. Squeri says, "Warren has selected someone who is philosophically aligned with him. And my anticipation is that things will continue as they are."

Buffet's Investment in AmEx:

Buffett established his first large position in AmEx in 1991 with a $300 million purchase. Today, he has a $23 billion-plus stake in AmEx, equaling 20.4% ownership. The credit-card boom of the 1970s and 1980s made AmEx a top player in the market, and the company has continued to grow, with more than 77 million cards in service worldwide. Wall Street analysts expect AmEx to post $8.2 billion in net profits this year, up from $4.8 billion in 2016.

Buffet’s Start in AmEx Investment:

Buffett's interest in AmEx began in the early 1960s when he saw a lucrative opportunity in the heart of a crisis. He acquired 5% of AmEx for roughly $20 million after the "salad-oil scandal" involving the Allied Crude Vegetable Oil Company, which prompted concerns on Wall Street, given AmEx had to pay Allied's bill.