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American Express or Wells Fargo, What Did Buffett Buy?

August 25, 2008 | About:
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Todd Sullivan

22 followers
After Buffett teased the investing world Friday saying he bought more of either Wells Fargo (WFC) or American Express, folks are speculating as to which one he bought. I was under the impression Buffett and Bekshire (BRK.a) had virtually tapped out their ability to buy more American Express (AXP) shares.

After buying 13% of the outstanding total, in 1995 Buffett agreed to the following in a letter to the Chairman Harvey Golub. The letter said Berkshire would not:


(1) acquire or retain shares that would cause its ownership of

American Express** voting securities to equal or exceed 15% of the amount

outstanding (if at such time Berkshire Hathaway has a representative on the

Board of Directors of American Express as allowed by section 4 hereof), or

otherwise acquire or retain shares that reflect ownership or more than 17% of

the amount outstanding; _provided_ that for the purposes of this commitment

shares held by officers or directors of Berkshire Hathaway shall be aggregated

with shares held by Berkshire Hathaway;


Now, Berkshire does not currently have board representation on Amex (unless I missed a recent change) so if Buffett bought more, it would only be less than 2% of the total outstanding in order to comply with the agreement. I do not think that this agreement has been altered or changed, it may have been but I do not see where. If anyone know where it as, please let me know.

We know Buffett bought more Wells Fargo this spring at prices higher than current ones saying he saw value at those prices. If he think there is value there, he must logically see more now.

Of course Amex share did plunge earlier this summer, presenting a great buying opportunity, it is just that there isn't much more buying Warren can do under the agreement.

We'll find out in short order what he added, my bet is more Wells Fargo.

About the author:

Todd Sullivan
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.5/5 (12 votes)

Comments

kfh227
Kfh227 premium member - 5 years ago
I doubt he timed the dip in mid July, but if he wasn't buying in June, why would he have started on July 1? Is he that concerned about piggybacking?

Highlights July 2008:

http://finance.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1219262400000&chddm=25598&q=NYSE:WFC&ntsp=0

A similar AXP chart:

http://finance.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chdet=1219722194156&chddm=39820&q=NYSE:AXP&ntsp=0

AXP has been near it's 52 week low since July 1 and hasn't gone up much.

Alot can be inferred about this. All speculative so I will refrain. I will state though that I was shocked that WEB wasn't buying WFC in June, so as much as I think he bought in July, I have my doubts. If he buys value with no concern for market timing, why would he not buy in June?
kfh227
Kfh227 premium member - 5 years ago
In the video, all WEB said is that he bought one of the two "in recent months". That simply could refer to his Q1 purchase of WFC.
chihin
Chihin - 5 years ago
Assuming Buffett only bought an additional 2% of AXP, this would be an additional US$880 million. Still quite chunky.
adamcz
Adamcz - 5 years ago
I've seen it asked many times, but never answered: what does Buffett need to do paperwork-wise before he can exceed 9.9% ownership of WFC?
softdude2000
Softdude2000 - 5 years ago
I think he bought WFC. I think WEB will wait for AXP.
adamcz
Adamcz - 5 years ago
Thanks for the great link tkervin. I'm not sure I understand the chronology of how it would work though - could Buffett just buy shares, and wait for potential character inspection, or would he have to apply to the FDIC first prior to buying more shares?
alex24_malaga
Alex24_malaga - 5 years ago
BRK and WEB bought WFC during this quarter acoording to today's CNBC interview:

http://www.cnbc.com/id/27011627

"He also revealed that he owns only two domestic stocks in his own personal account, Berkshire and Wells. After the live interview, he laughingly told Becky that no one had ever gotten that particular nugget out of him before.

Back in August, Buffett told Becky that Berkshire had been adding to its holdings in either American Express or Wells Fargo. Today, he solved that little mystery. It was Wells Fargo.

kfh227
Kfh227 premium member - 5 years ago
alex24_malaga Wrote:

-------------------------------------------------------

> BRK and WEB bought WFC during this quarter

> acoording to today's CNBC interview:

>

>

>

> "He also revealed that he owns only two domestic

> stocks in his own personal account, Berkshire and

> Wells. After the live interview, he laughingly

> told Becky that no one had ever gotten that

> particular nugget out of him before.

>

> Back in August, Buffett told Becky that Berkshire

> had been adding to its holdings in either American

> Express or Wells Fargo. Today, he solved that

> little mystery. It was Wells Fargo.

>

If he said that he only has BRK and WFC in his personal account, how does that translate into he ought WFC this quarter? These are two independent things. And he could have held WFC for many many years in his personal account. Remember WFC share price when he was buying in the first place? That's probably when he bought some for himself.

alex24_malaga
Alex24_malaga - 5 years ago
Just watch the end of the interview. He verbally said WFC was the stock BRK has been buying, not AXP...

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