What do you do when you find a stock with more than 988 million of its products in use... that holds more than $28 per share in cash... and is buying back $2 billion in stock?
I think you buy it and hold it forever. And I'm evidently not the only one...
Just a few months ago, Warren Buffett seemed to have the same idea.
According to Berkshire Hathaway's (NYSE: BRK-B) most recent filing, the company just purchased 189,000 more shares of this stock. Buffett and Berkshire already had a 216,000 share stake in the company. With the new purchase, they now own 405,000 shares -- a stake worth roughly $125 million.
You've no doubt heard of this company. In fact, you might hold one of their 988 million cards in use around the world. That's because in total this company -- MasterCard (NYSE: MA) -- boasts more than 880 million accounts and racks up $545 billion in transactions each year.
But besides its size, what is it about MasterCard that has grabbed Buffett's attention?
Well for one, even though MasterCard makes credit cards, it doesn't actually take on any credit risk. It simply acts as a "toll" operator.
You see, MasterCard doesn't have anything to do with the debt investors put on their credit cards -- that's the banks' liability. MasterCard simply earns a small percentage of each transaction that users make on its cards.
In other words, MasterCard makes more money as the number of people around the world using its cards grows. And though this number is growing daily, according to MasterCard CEO, Ajay Banga, close to 90% of all transactions in the world still use cash.
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