Australia markets closed

    -8.50 (-0.12%)

    -0.0024 (-0.37%)
  • ASX 200

    -7.90 (-0.11%)
  • OIL

    +0.94 (+1.04%)
  • GOLD

    -6.80 (-0.35%)
  • Bitcoin AUD

    +138.93 (+0.34%)
  • CMC Crypto 200

    +1.58 (+0.28%)

American Express CEO on why Warren Buffett is a legendary investor

American Express (AXP) CEO Stephen Squeri now has a direct line to legendary investor and No. 1 AmEx shareholder Warren Buffett — and all the business magic that comes with it. It's something Squeri views as a "privilege."

That special access is in sharp contrast to when Squeri first dined with the Berkshire Hathaway (BRK) chairman, known as the "Oracle of Omaha," many years ago.

"It was very intimidating," Squeri recalled in a chat with Yahoo Finance at his downtown NYC office, ahead of Berkshire's big annual meeting in Omaha on Saturday.

"Fortunately, Ken [former AmEx CEO Ken Chenault] was there, and there were other people there. But I looked at that and I said to myself here I am – and I'm senior vice president at the time, which is one of our top 120 people in the company – and in what world did I ever believe I'd be sitting down and having lunch with Warren Buffett. I remember calling my dad and saying, 'I just had lunch with Warren Buffett!'"

About five years into his tenure as head of AmEx, Squeri more fully understands the business and investing magic of billionaire Buffett. The Berkshire Hathaway boss's approach has led to his being a very long-term investor in AmEx, one who has been handsomely rewarded as the financial services company has grown.

The veteran investor's interest in AmEx began in the early 1960s when, in classic Buffett form, he smelled a lucrative opportunity in the heart of a crisis.

In 1963, Allied Crude Vegetable Oil Company founder Anthony De Angelis used its inventory as collateral for loans from more than 50 entities, including AmEx. De Angelis used these loans to drive up prices in the soybean oil market and increase the value of Allied.

Eventually, a whistleblower came forward claiming that Allied was misleading AmEx to get more loans, by filling up oil tanks with water. This was proven to be true, and De Angelis filed for bankruptcy and went to prison for seven years. The impropriety became known as the "salad-oil scandal" and prompted concerns on Wall Street, given AmEx had to pay Allied's bill.

Buffett used the opportunity to acquire 5% of AmEx for roughly $20 million.

The credit-card boom of the 1970s and 1980s made AmEx a top player in the market. By the late 1990s, two-thirds of American households had a payments card.

Buffett established his first large position in AmEx in 1991 with a $300 million purchase. Within seven years, he owned more than 50 million shares of the company.

Berkshire Hathaway hasn't purchased any AmEx stock since the late 1990s, but its stake has continued to increase as a result of stock buybacks. Today, Buffett has a $23 billion-plus stake in AmEx, equaling 20.4% ownership.

Shares of AmEx have climbed from around $2.50 in early 1980 to more than $152 currently.

AmEx has more than 77 million cards in service worldwide. Wall Street analysts expect AmEx to post $8.2 billion in net profits this year, which would be up handsomely from $4.8 billion in 2016.

American Express CEO Stephen Squeri reflects on his interactions with top shareholder Warren Buffett through the years.
American Express CEO Stephen Squeri reflects on his interactions with top shareholder Warren Buffett through the years.

Squeri has seen the best investing magic of Buffett in the past few years: an unbridled focus on the long term, no matter what is happening in the present day.

"I talked to him [early on in the pandemic] and said to him that, 'Look, the reality is we're probably not going to have a great year. I mean we could actually lose money this year,'" Squeri said.

"As we went through this, he said: 'I don't care about this year, and I don’t care about next year. What I care about is that you keep the brand special, that you continue to invest in the brand, and that you retain your customers,'" he added.

Those touchstones are at the heart of Buffett's approach, according to Squeri.

"He looks for good businesses that are sustainable. And he doesn't react to the peaks and valleys. When you have an investor that is focused on the long to medium term like he is, it is easy to make the right decisions for the business."

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 AmEx CEO says he isn't concerned some of the Buffett magic will fade once the veteran investor steps aside as Berkshire Hathaway CEO and hands the reins to likely successor Greg Abel.

"Warren has selected someone who is philosophically aligned with him. And my anticipation is that things will continue as they are," Squeri said.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance