This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Buffett's New Charge Card

Stocks in this article: MA AXP IYG BRK.A IYK XRT

NEW YORK ( TheStreet) -- Over the course of the week, investors and market commentators have been mulling over the 13F regulatory filings released by individuals including George Soros, Steve Cohen, John Paulson, and Warren Buffett.

These documents typically have provided plenty of interesting clues and insights into the current mindsets of these Wall Street notables.

According to the filing, Buffett made only minor adjustments to his legendary investment portfolio during the opening quarter of 2011. The most noticeable change was the addition of Mastercard (MA - Get Report). As of the end of March, Buffett's stake in the credit card company totaled 216,000 shares. Aside from this new position, the investor also trimmed his stake in ConocoPhillips (COP).

This is not the first time that Buffett has tapped into the credit card industry. On the contrary, American Express (AXP - Get Report) is a long-standing Berkshire Hathaway (BRK.A - Get Report) holding and is currently his third largest position, accounting for a more than 10% stake of the portfolio.

As noted by many, the decision to gain exposure to Mastercard is not surprising. Rather, the move can likely be traced back to Buffett's newest hire, Todd Combs, a former hedge fund manager-turned-potential Buffett successor. Prior to joining Berkshire Hathaway, Comb's hedge fund, Castle Point, held a large stake in the credit card company as well.

Buffett's attraction to credit card companies like Mastercard and American Express can be viewed another play on the strength of the U.S. consumer. Throughout the slow and often arduous economic recovery, he has consistently maintained a bullish outlook for the United States.

>>View Warren Buffett's Portfolio

Although financials represent the largest slice of Buffett's portfolio's sector breakdown, the Oracle of Omaha also boasts heavy exposure to companies that will be influenced by the consumer's resurgence. Top portfolio components include Coca-Cola (KO), Procter & Gamble (PG), Kraft Foods (KFT) and WalMart (WMT).

Like Coca-Cola and WalMart, the long-term strength of Mastercard and American Express will heavily depend on the consumer's recovery. As individuals regain confidence, they will become increasingly willing to use credit cards in order to make big ticket purchases.

As noted by Bloomberg following news of Buffett's actions, the consumer has already started off 2011 on a postive note. According to the quarterly report issued by the U.S. Commerce Department, retail sales during the first three months of 2011 jumped nearly 3%.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs