What Did Buffett Buy: American Express or Wells Fargo?

Includes: AXP, BRK.A, WFC
by: Todd Sullivan

After Buffett teased the investing world Friday saying he bought more of either Wells Fargo (NYSE:WFC) or American Express (NYSE:AXP), 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 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 knows 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 thinks there is value there, he must logically see more now.

Of course Amex shares 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.

Disclosure: Long WFC