68% of Greg Abel's Berkshire Hathaway Portfolio Is Invested in Just 5 Stocks. Here's My Favorite of the Bunch.

Warren Buffett spent decades preaching that a fistful of large businesses beats a handbasket of mediocre ones, and his successor is moving the aforesaid play. Under caller CEO Greg Abel, Berkshire Hathaway has slimmed its banal portfolio down to less names, and astir 68% of it present sits successful conscionable 5 companies.

Those 5 are Apple, American Express (NYSE: AXP), Coca-Cola, Bank of America, and Chevron. Each is simply a fantastic business, but 1 stands retired to maine supra the rest.

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Concentration is the point, not a flaw

Before getting to my pick, it is worthy appreciating wherefore Berkshire bets truthful large connected truthful fewer stocks. Abel has trimmed the portfolio to nether 30 holdings and spotlighted a abbreviated database of halfway positions, each 1 a institution with a wide competitory moat and durable earnings. To a newer investor, putting astir of your wealth successful 5 stocks mightiness look reckless.

To Buffett and Abel, spreading wealth bladed crossed dozens of so-so businesses is the existent risk. They would alternatively ain a batch of a fewer things they recognize deeply. That doctrine is precisely wherefore the names astatine the apical of this database are worthy studying.

My favourite of the bunch: American Express

Apple is the biggest holding, but American Express is the 1 I would happily own. What makes it peculiar is that it is not truly a recognition paper institution successful the mode astir radical think. It runs a closed-loop network, meaning it issues the cards, processes the payments, and serves the merchants each astatine once, truthful it earns a interest connected astir each dollar its customers spend. That fee-based, spend-centric exemplary is acold steadier than a emblematic lender that lives oregon dies connected involvement and indebtedness losses.

Even amended is who is doing the spending. American Express caters to affluent, loyal customers, and it has been aggressively courting the adjacent procreation of them. Its caller Platinum paper overhaul -- the largest successful its past -- has been a hit, and the institution added millions of caller cards, with the immense bulk signing up for fee-charging products.

Most striking to me, millennials and Gen Z present marque up astir 65% of its caller user accounts globally and relationship for a rising stock of full spending. The strategy is diligent and smart: Win young, high-earning customers aboriginal with perks that talk to them, similar eating reservations done Resy and Tock and a quarterly recognition astatine Lululemon Athletica, past turn alongside them arsenic their incomes and needs grow implicit decades.