Billionaire Andreas Halvorsen’s Top 5 Stock Picks

4. American Express Company (NYSE:AXP)

The billionaire Andreas Halvorsen used the dip in American Express Company (NYSE: AXP) stock price as a buying opportunity. The hedge fund has initiated a big position in AXP early in 2020 when its shares fell sharply on virus spread concerns. American Express Company accounts for 3.91% of the overall portfolio valued above $1 billion.

Shares of American Express are down 5% in the last twelve months despite a strong recovery in the last six months. The market reports are hinting that AXP’s financial numbers are likely to take a long time for a full recovery. The New York Fed’s latest Survey of Consumer Expectations Credit Access Survey indicates the big impact of the pandemic on credit demand, credit access, and expectations relating to both for the coming year.

About 6 months ago we shared the following remarks from Bill Nygren about American Express:

“With American Express, we believed the worst-case scenario was significantly better than all that. We think the company has done an excellent job in improving its cardholder value proposition in recent years by making significant investments in merchant acceptance, cardholder rewards and services, and small-business payment tools. Relative to entering the last financial crises, it has dramatically cut costs and strengthened its balance sheet structure.

The payments-network side of the business is now more competitive with Mastercard and Visa. Given all that, in the adverse Fed scenario, we would still expect American Express to earn $4 to $5 per share this year. Two years from now, we think it should be earning more than twice that. With the stock where it is today [at a recent $96], we believe that’s too cheap for this caliber of business.”