Do you want to peek over the shoulders of the Oracle of Omaha? This time, you’ll see that billionaire investor Warren Buffett owns millions of shares of Visa Inc. (NYSE/V).
According to Berkshire Hathaway Inc.’s (NYSE/BRK-A, BRK-B) 13F filing with the SEC, the company owns 9.9 million shares of Visa, worth $646.6 million. This represents a 294% increase over the previous quarter.
With solid and predictable financial results, Visa fits nicely in Buffett’s portfolio. Visa’s operating revenue increased consistently from $10.4 billion in full-year 2012, to $11.8 billion in full-year 2013, and to $12.7 billion in full-year 2014. Adjusted net income grew consistently as well in the previous three fiscal years; from $4.2 billion to $5.0 billion, and then to $5.7 billion.
Consistent growth in operating results translated into solid improvement in earnings per share. Seeing the solid performance of Visa, investors rushed towards the company. Its stock price surged 25.8% in the past 12 months.
Buffett prefers companies with wide economic moats. An economic moat is essentially a company’s competitive advantage that can protect itself from the competition. When it comes to competitive advantage, few companies are in a better position than Visa.
With tens of millions of businesses on its payment network, the success of Visa is very difficult to duplicate. The company is essentially playing a game of oligopoly—the industry has four major players: Visa, MasterCard Inc, American Express Company, and Discover Financial Services. So far, Visa is way ahead in the game.
Based on network purchase volume in 2014, Visa was number one in both credit card networks and debit card networks. Moreover, the company has been holding that title for a while. With 304 million cards in circulation, Visa captured 48.9% of the market.
Visa has also been paying dividends since its initial public offering in 2008, and Buffett likes dividend-paying stocks.
Mind you, Warren Buffett is not the only billionaire investor that has been loading up on shares of Visa. In the same filing period, Jim Simons’s Renaissance Technologies increased its position in Visa by a staggering 1,043%! Now Renaissance Technologies owns 4.3 million shares of Visa, worth approximately $280.1 million.