How to invest like Warren Buffett – 3 share ideas from his portfolio

American Express

American Express is a key holding for Buffett, and it’s easy to see why.

A strong brand, long heritage, differentiated model, and wide moat are all strengths.

The end-to-end payment network is a key feature – it issues the card, manages the network, and deals directly with merchants.

This setup lets the company keep more of the profit from each transaction, and its focus on the card experience has built a strong reputation with wealthy individuals and businesses.

We think American Express is in a good spot to handle economic bumps.

It has strong financial reserves and wealthier customers who tend to spend and repay more reliably.

However, the company still depends a lot on travel and entertainment, which makes up 28% of its spending volume.

Its commercial card business, while less talked about, is still a dial mover and could face pressure if trade issues persist.

American Express has always focused more on payments than lending, with only about a quarter of its revenue coming from interest income.

However, its push toward younger customers and more lending features has fuelled strong growth, with net interest income rising at a 26% annual rate over the past three years.

That pace is expected to slow from here, but it’s still outpacing peers.

Cardmember loans rose 10% to $139.2bn, helping push net interest income up 11% in the recent quarter.

Credit performance remains solid too – write-downs and default rates stayed steady from last year, showing strong borrower behaviour.

Shareholder returns won’t shoot the lights out, with a prudent dividend policy in play. For long-term holders like Buffett, that’s not an issue.

In fact, reliability is a key strength as we saw during the pandemic when American Express was able to keep its dividend intact.

All in, we think American Express has an attractive mix of defensive qualities, strong branding, and an attractive customer base. A major US spending slowdown is probably the main risk to keep an eye on in the near term.

Berkshire Hathaway

While Warren Buffett might be retiring, his investment philosophy will live on at Berkshire through CEO-elect, Greg Abel.

So, if you want to gain exposure to Buffett’s investment principles on autopilot, owning shares of Berkshire Hathaway is the way to do it.

Berkshire is a holding company that owns a wide variety of businesses.

Operations can generally be split into four main buckets.

Firstly, insurance is the main game at Berkshire. The insurance model is also rather rare. Most other businesses incur costs to build a product or service and then receive money later when it sells.

Insurance flips that dynamic on its head, gaining money up front and finding out much later what the product has cost when policyholders make claims.

We must caution that successfully pricing insurance contracts is difficult, and costs can mount quickly if disasters occur – think wildfires or hurricanes.

Secondly, the money-up-front model has also allowed Berkshire to invest large sums of cash until claims are made, earning a tidy return in the meantime. This cash is typically invested in large, liquid securities like Apple or Coca-Cola, or even short-term government debt due to the high interest rates currently.

Thirdly, there are the large railroads and utilities businesses like BNSF Railway and Berkshire Hathaway Energy. Although these can cost a lot to operate, they’re strong assets with stable cash flows, which should hold up relatively well even if economic conditions deteriorate.

Finally, there are the more than 180 manufacturing, retail and service businesses that Buffett has scooped up over the years. These are private companies, which tend to have some kind of economic moat and strong pricing power.

First-quarter performance has dipped slightly, largely due to insurance operations. But we’d encourage investors to focus on the longer-term picture. Berkshire’s collection of businesses looks well-placed to ride out any potential macroeconomic storm ahead.

Succession risk is something to keep in mind.

While Greg Abel has been a key figure at the company for over 20 years and shares Buffett’s investment philosophy, there’s still no guarantee he will have the same level of success when Buffett steps back from his CEO role.

Coca-Cola

Warren Buffett first bought a stake in Coca-Cola way back in 1988.

Fast-forward to 2025, and it remains one of Berkshire Hathaway’s biggest holdings – epitomising his buy-and-hold strategy.

Of course, Coca-Cola’s brand is one of its core strengths. It boasts a truly global presence in a market that’s unlikely to disappear anytime soon. That brand gives it pricing power, which in turn allows the giant to perform well in a range of environments.

However, what separates the company from most of its peers is its operating model.

Coca-Cola doesn’t actually bottle the drinks itself. This would mean owning a host of bottling plants worldwide, each of which would need to be filled with expensive machinery requiring fairly regular upgrades or replacements.

Instead, Coca-Cola offloads this task to local bottling plants already established in the required region. This allows the group to keep a lid on costs and supports its industry-leading gross margins, which hover around the 60% mark.

This structure has two major benefits.

Firstly, it frees up more cash for Coca-Cola to outspend its peers on marketing, which in turn helps power top-line growth for the bottlers.

Secondly, as bottlers don’t need to invest in marketing, they can invest more resources into upgrading machinery and digitising sales teams to help support best-in-class execution.

The split-role structure makes it very difficult for competitors to challenge Coca-Cola’s dominance.

Tariffs have the potential to disrupt supply chains and push up costs. But given Coca-Cola’s system, with bottling plants all over the world, the impact of tariffs looks manageable.

There’s also an ongoing tax dispute with US tax authorities, with a potential multi-billion-dollar payment on the line. Currently, Coca-Cola appears confident of winning the legal battle, but any negative developments could swing near-term sentiment.

Coca-Cola owns one of the strongest brands in the world. Given the impressive profit growth and strong balance sheet, it remains one of our favourite names in the beverages sector. But investors should remember nothing is immune to ups and downs, especially in the short term.