Warren Buffett spent decades preaching that a handful of great businesses beats a basket of mediocre ones, and his successor is running the same play. Under new CEO Greg Abel, Berkshire Hathaway has slimmed its stock portfolio down to fewer names, and roughly 68% of it now sits in just five companies.
Those five are Apple, American Express (NYSE: AXP), Coca-Cola, Bank of America, and Chevron. Each is a wonderful business, but one stands out to me above the rest.
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Before getting to my pick, it is worth appreciating why Berkshire bets so big on so few stocks. Abel has trimmed the portfolio to under 30 holdings and spotlighted a short list of core positions, every one a company with a wide competitive moat and durable earnings. To a newer investor, putting most of your money in five stocks might look reckless.
To Buffett and Abel, spreading money thin across dozens of so-so businesses is the real risk. They would rather own a lot of a few things they understand deeply. That philosophy is exactly why the names at the top of this list are worth studying.
Apple is the biggest holding, but American Express is the one I would happily own. What makes it special is that it is not really a credit card company in the way most people think. It runs a closed-loop network, meaning it issues the cards, processes the payments, and serves the merchants all at once, so it earns a fee on nearly every dollar its customers spend. That fee-based, spend-centric model is far steadier than a typical lender that lives or dies on interest and loan losses.
Even better is who is doing the spending. American Express caters to affluent, loyal customers, and it has been aggressively courting the next generation of them. Its recent Platinum card overhaul — the largest in its history — has been a hit, and the company added millions of new cards, with the vast majority signing up for fee-charging products.
Most striking to me, millennials and Gen Z now make up around 65% of its new consumer accounts globally and account for a rising share of total spending. The strategy is patient and smart: Win young, high-earning customers early with perks that speak to them, like dining reservations through Resy and Tock and a quarterly credit at Lululemon Athletica, then grow alongside them as their incomes and needs expand over decades.
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