Buffett Wants To Hold Tight On AmEx Stake

Warren Buffett’s Berkshire Hathaway wants to hold more shares of American Express and has asked the Federal Reserve to allow it do just that.

According to a report in Bloomberg News, Berkshire Hathaway wants to own as high as 24.99 percent of the credit card company. The stake has been increasing because of American Express’s stock buybacks.

“This is an application to continue to retain American Express stock, not to buy additional shares,” Marina Norville, a spokeswoman for New York-based AmEx, said in an emailed statement to Bloomberg. Berkshire applied to “increase the percentage ownership cap to 24.99 percent from the current 17 percent as a result of our share-repurchase program,” she said in the report.

During a conference call with analysts in April, Jeffrey Campbell, the chief financial officer of American Express, said the company has returned lots of capital to shareholders via dividends and share repurchases. American Express got the nod in 2016 to buy $4.4 billion of its shares during the year and $1.7 billion in the first half of this year. Bloomberg noted Berkshire is American Express’s biggest shareholder, owning around 151.6 million shares, or 17 percent of the stock, as of the end of March.

For a long time, regulators in the U.S. have set limits on the ties non-financial companies and banks have, reported Bloomberg, noting investors have to inform the Fed in most cases, as well as the public, before acquiring stakes that exceed upon set levels. Bloomberg noted that in the 1990s, Berkshire Hathaway pledged to be a passive investor in American Express, once the stake surpassed 10 percent.

In 2016, Berkshire had applied to increase its stake in Wells Fargo above the regulator threshold, but in April cut the stake below 10 percent after regulators said if it stayed above the limit, it would hurt its ability to do business with Wells Fargo.



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