Bitcoin, SPACs, and More Key Takeaways From Berkshire Hathaway's Annual Meeting

Berkshire Hathaway's (BRK.A -1.05%) (BRK.B -0.83%) 2021 annual meeting was virtual for the second year in a row, but it certainly didn't disappoint. In this installment of Industry Focus: Financials, host Jason Moser and Fool.com contributor Matt Frankel, CFP, discuss five things from the meeting that investors need to hear. Plus, Moser and Frankel discuss the latest results from Capital One (COF -1.99%), SVB Financial (SIVB.Q -16.67%), and American Express (AXP -0.03%). 

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This video was recorded on May 3, 2021.

Jason Moser: It's Monday, May 3. I'm your host, Jason Moser, and on this week's financials show, we're digging into five big takeaways from Berkshire Hathaway's latest shareholder meeting over the weekend, and we've also got a few more earnings reviews on tap for you. Joining me this week, it's Certified Financial Planner Mr. Matt Frankel. Matt, how is everything down there in lovely South Carolina?

Matt Frankel: It's kind of rainy today, but other than that, it's a pretty good day. How about you? How is it going up there?

Moser: It's a little overcast here. We had some rain through the night and then into this morning. It seems like it's clearing up a little bit, so hopefully it'll be clearing out for a nice weekend, or a nice week here. But I mean, the weather was really nice over the weekend, so that was a bonus.

Well, over the weekend while the weather was nice, there were probably a lot of people who opted to stay inside for a decent bit of Saturday because a little thing known as the Berkshire Hathaway annual shareholder meeting took place. Matt, that is obviously one of the big events of the year for investors of all walks, oftentimes has been referred to as the Woodstock for Capitalists. Having the opportunity to go out there one year and actually experiencing the meeting was something I'll never forget. I mean, it was really a lot of fun, and being out there with the press badge no less, I mean, that really made it like the first-class experience from start to finish. If I recall correctly, correct me if I'm wrong, but you've not physically been to that meeting yet, right? You were planning on going, and then all of this COVID stuff happens, so you've had to postpone those plans for a little while.

Frankel: Yeah, I had hotel reservations in 2020. Had to cancel those. Then I rebooked it for 2021, and they made this one virtual too [laughs]. Not only was this one virtual; I think it was in California.

Moser: It sounds like this next year, though, will not be virtual from what I can ascertain. Is that right?

Frankel: I hope. I hope Munger can make the trip, because they held it in California to accommodate him this year.

Moser: Yeah. We're all getting older, but he's no spring chicken, though I did like the way he phrased his aging. I think he is aging at 1% annualized a year or something to that effect.

Frankel: [laughs] Charlie Munger is who I want to be when I'm 97.

Moser: [laughs] Yeah, I agree with that. I'm right there with you. [laughs] I think he's done it right. Well, speaking of Charlie and Warren and all of the fun stuff that occurs during a normal year at the Berkshire meeting -- clearly, virtual is a bit of a different story, but always insightful, always educational, and we always get some really needed takeaways, and this year was no exception. I wanted to jump into this with you, because we were talking before the show here, and there were some things that really stood out to you, and I agreed with a lot of it. But let's dig into these takeaways, because I think you've got five fun takeaways to talk about here today. So let's just jump right in with takeaway No. 1.

Frankel: Yes. There were more than five, obviously. We can't get through all of them. You know, it's a long meeting. I can't talk for as long as those two guys can.

Moser: Yeah, we've got to draw the line somewhere, so we're just going with this, your top five. So let's see what you got.

Frankel: One of the biggest ones is Charlie Munger let slip who is going to be the next CEO. [laughs] The succession plan, obviously, has been a big focus for years. Warren Buffett is 90; Munger is 97. They're human beings. They're not going to be leading the company forever. I mean, Buffett has even said he might retire at some point, so it's been highly speculated who is going to take his place. We got some clarity a couple of years ago, when they made Greg Abel and Ajit Jain the two co-chairmen or the vice chairmen of the company, to join Charlie Munger as vice chairman. We knew it was going to be one of them, and Munger said it's going to be Greg Abel. He let it slip, and then Warren Buffett confirmed that later on, and it makes sense. 

One of Buffett's biggest points of choosing a successor is someone who could potentially lead the company for a few decades. Greg Abel is 59. The other co-chairmen or the co-vice chairmen are 69 and 97, if you include Munger in the equation. The 59-year-old is the one who is most likely to stay Berkshire's CEO for a couple of decades if he gets the job.

I've got to think that's really what made the decision in that respect. Both are doing great. Greg Abel, by the way, is currently in charge of all non-insurance operations at Berkshire, so he presided over the railroad business, the utility business, Dairy Queen, Duracell, all the little adjacent businesses. Pretty much everything but the insurance portfolio and the stock portfolio is currently what he is presiding over. Everyone pretty much assumed it would be him. But now we finally had some real confirmation about Berkshire's succession plan.

Moser: I mean, I think you're right. I mean, I don't know, to me at least, it felt like it was probably even money whether it would be Jain or Abel. I think there were enough people out there who thought it could be Jain, given his experience with the business, given his familiarity with the insurance business in particular.

But to that point, and that's what struck me, was with Mr. Abel, given his bigger-picture focus for the company, it seemed like, age notwithstanding, maybe he was the better choice, given his bigger-picture view. Not just focused on really insurance, and he has even said this, he tends to stay focused on the competitive threats for Berkshire Hathaway writ large, as a conglomerate, as this gathering of so many different businesses. He's always focused on those competitive threats in that competitive landscape, whereas Ajit Jain is clearly very focused on the insurance operations for obvious reasons, and that plays a very big role in Berkshire's business. To me, it kind of feels like they got this one right, though.

Frankel: I would agree with that. I guess age is a big thing, and the other thing is that they want to preserve the corporate culture, which, the culture is, have all these conglomerates and don't tell them what to do. Which, Greg Abel is really the one that's over that part of the business, as you said. I mean, Ajit Jain, I would even make the case that aside from his age, he's the favorite of the two leaders in Buffett's eyes, just reading the praise he has gotten in annual letters over the years. But I mean, you can't really make the case that there's anyone more connected to Berkshire's corporate culture right now, aside from the two at the very top, [laughs] whose succession plan we're talking about, than Greg Abel.

Moser: Yeah, and I mean, that makes sense, too. I mean, having a company, clearly, Warren and Charlie feel like they've gotten this company to a good place. They like the potential. They like what the future holds. They want someone in place who they feel is in line with what matters most to them, and so certainly it'd be tough to come up with a name other than Mr. Abel, perhaps Mr. Jain, but here we are. Whether it was an accident or not, we know a little bit more now than we did before, and typically as investors, that's a good thing.

What about takeaway No. 2?

Frankel: Well, let's get to the Bitcoin part, because [laughs] let's get this out of the way, because I know Jason is going to be triggered and offended by these comments.

Moser: Hate mail is addressed to Matt Frankel.

Frankel: [laughs] They're not my words.

Moser: No. That's right. We're just communicating what we've heard. But I thought this would be a fun one to talk about, so yeah, let's dig in a little bit of Munger's feelings on Bitcoin.

Frankel: First of all, Buffett dodged the question. He even said, "I'm dodging the question."

Moser: It's like politics.

Frankel: He completely understands that his opinion on Bitcoin is not a popular one.

Moser: Yeah.

Frankel: Buffett does. Munger has always been kind of an unfiltered speaker. And whatever filter he had, now that he's 97, is gone. He's had some pretty mean comments about Bitcoin through the years already. He said, "Of course I hate the Bitcoin success." That's what he said. [laughs] He said, "I don't welcome a currency that's so useful to kidnappers and extortionists and so forth. Nor do I like shuffling out a few extra billions and billions of dollars to somebody who just invented a new financial product out of thin air." If that wasn't enough, he went on to say that it's disgusting and contrary to the interests of civilization.

Moser: Wow.

Frankel: Tell us how you really feel, Charlie.

Moser: Those are strong words. Agree with them or disagree with them, we're talking about, obviously, his feelings on the matter, and granted, he's not the only one, I'm sure, that feels that way. But yeah, it does seem like he's opening the invitation for a lot of blowback there from the younger generations of investors who feel like he's too old, he just doesn't get it, Bitcoin is the future, whatever it may be. Everybody has got an opinion on the matter. It's not like Charlie is just some guy who picked a couple of stocks and rode that success. He's been part of building something pretty special and pretty meaningful over the last several decades. He knows a thing or two.

Frankel: I don't want to get involved in the Twitter war. I know there's a lot of people at The Motley Fool who love Bitcoin, who are big believers in it. It's a very polarizing investing topic.

Moser: Yeah. I think it's interesting, too, because you said, and these are his words, but he refers to it as a currency. There is a debate that we had as currency versus asset. Two very different things. It certainly depends on the perspective of how you're viewing it, whether it's an asset, or a currency, or something else.

Frankel: Yes. What I would say is don't be so quick to dismiss Munger as an "OK, boomer," or any of those. [laughs] I think he's actually above a boomer.

Moser: I think you're right.

Frankel: I think the oldest boomers are in their 70s right now, and he's well beyond that.

Moser: That's no surprise, his feelings on the matter. I would imagine with things like Dogecoin, they just become magnified, and so there you go. You can agree with him or disagree with him, but clearly, there's more than one opinion on the matter.

Frankel: I saw something on a chat that said, "you think his comments on Bitcoin are bad? You'd better be lucky they didn't mention Dogecoin, because it could've exploded." [laughs]

Moser: I have a feeling they're going to be more of these types of things introduced in the near future. It will be interesting to watch how this market shakes out.

Frankel: You know what else I've noticed? Nobody just kind of likes Bitcoin. [laughs] Everyone either thinks it's the next big thing in finance, or they're Charlie Munger.

Moser: It's difficult for me to fully wrap my head around why it matters. I've always said, and I stand by this, Bitcoin bulls, to me, they've done a phenomenally horrible job at explaining why it matters. I'm not saying it doesn't. Don't get me wrong, so don't at me. Understand, I don't care. I just don't care about Bitcoin. But what I am saying is they've done a very poor job of explaining why it really matters. You can tell me about decentralized, and unhackable, and yadda, yadda, yadda. But they've just done a very poor job of explaining why it really matters.

I'm sure we will get a lot of people explaining from here on out why it really matters on Twitter and whatnot. That's fine. But it will be interesting to watch that space evolve, because you're right, it's either one or the other. You either love it or you hate it, and I would add maybe a third category, and I think I fall on this third category -- you just are apathetic. You just don't believe in it.

Frankel: I was going to start calling you Jason Munger.

Moser: I just don't care. [laughs] There's a third category, so I don't lose sleep over it. If it works out, great. If it doesn't work, fine. You know what, I know what I don't know. Maybe Munger will be proud of me, because I've realized what I don't know, and that's really one of his more famous quotes. It revolves around "Hey, know what you don't know, because that's when real wisdom starts kicking in." We'll see. A sign of a good investor is the ability to change one's mind, so maybe he'll change his mind one day. I don't know. We'll have to wait and see. 

Let's talk about your third takeaway here. We did a whole month's worth of shows on these. I'm not throwing out all of these, because there will be some babies that go out with this bathwater, but Buffett's problems with SPACs -- talk a little bit about that.

Frankel: Buffett first started talking about SPACs when asked about how they affect Berkshire's ability to find acquisitions. He said that's killing their ability to find deals. There are 400 SPACs in the market, all looking for targets. They all have a ton of cash. Things are getting expensive. He's pretty much saying the SPACs are overpaying for businesses. [laughs] He's saying it won't go on forever. That's where the money is now. That's what people are interested in now.

To be fair, take that with a grain of salt. People have been upset with Buffett's lack of ability to find deals for five years now. This has been going on for way before the SPAC boom. But the cash is just building up, and I think the whole elephant-gun quote was before anyone knew what a SPAC was.

With that in mind, his point is the SPACs pretty much have to deploy their capital within two years, which is true. That's usually the rule. He said, "If you put a gun to my head and tell me I have to buy a business in two years, I'd buy one. I wouldn't necessarily get the best deal, but I promise you, I would take that money and buy a business with it." Munger, being Munger, said it's not just stupid, it's shameful talking about the SPAC boom. [laughs] But Buffett was a little bit more thought out about it.

Moser: I feel like we went over a month's worth of shows talking about SPACs, and the merits, then the challenges and whatnot. I feel like there are probably going to be more losers in this space than winners. But there are going to be some important companies that come from this movement. I think there are going to be some important companies that have come public via SPAC, and we won't be sorry that they were able to come public. You just have to be very discerning, it feels like, with this space.

Frankel: Yeah, that was essentially the whole underlying theme of the shows we did. Everyone knows that I'm a SPAC investor. It's one area that I clearly disagree with Buffett and Munger on. I think that out of the 400, there are probably 10 you should pay attention to. But there are going to be some great companies that go public. I mentioned 23andMe as one that I'm particularly a big fan of as a company that's going public via SPAC. I think Opendoor, which went public through SPAC last year, I think it's a big one that has a ton of market potential. There have been some great companies that are going public through SPAC.

Moser: I'd put AppHarvest up there, personally. AppHarvest, controlled-environment agriculture, came public via SPAC. I think that's another one that, to me, we talk about where we feel the world is headed, I feel like that's solving a big problem, and I feel like that is a direction that the world needs to be headed. Whether AppHarvest goes public this year, or five years from now, maybe that doesn't necessarily make a difference, but maybe it does. The SPAC gives them the opportunity to get public and have those benefits, that capital access, that they might not have otherwise. Maybe they are a little bit earlier to the game, but I feel there are some companies out there that are important, and it's just giving them a little bit of an earlier start.

Frankel: Yeah. Think of it like the SPAC class of 2020 and 2021. Like any class, you've got your top 10% that are going to go onto Ivy League schools or whatever. [laughs] With SPACs, stay away from the bottom of the class.

Moser: Well, I think you just came up with an idea there. I feel like we need to build out an Ivy League class of SPAC recommendations. Maybe that's how we piggyback off the series of shows that we did earlier in the year on SPACs. The Ivy League SPAC portfolio.

Frankel: I like it. The Ivy League basket.

Moser: There you go. Well, as investors, we all make mistakes, and Buffett and Munger are no exception. They've made their share as well, and Warren talked about one of Berkshire's bigger mistakes, and that was takeaway No. 4 for you, Matt. What was one of Berkshire's bigger mistakes?

Frankel: Well, one of the things was what Buffett said was not mistaken, and that was selling the airlines. Remember, he got a ton of criticism for that last year, selling all Berkshire's airline stocks at big losses after the pandemic broke out, and he would have made billions if he had just hung onto them now that they've rebounded. He said the airlines have been better off without Berkshire involved as an investor, and basically, his point is that the government wouldn't have been as willing to bail out the airlines if they had an investor like Berkshire Hathaway backing them up.

Moser: Yeah, that's a good point.

Frankel: So I can see that. The airlines, he says, were not a mistake. People wanted to hear that. He did say that it was a mistake that they sold some Apple stock last year. He even said that Munger tried to talk him out of it. [laughs] As we know, Apple is by far Berkshire's biggest stock positions, with well over $100 billion at this point. He sold a small amount. Not a ton, but several billion dollars' worth. He said that was probably a mistake. He also said it was a mistake exiting Costco. If you remember, Berkshire sold out of Costco in the third quarter last year.

Moser: I do remember that.

Frankel: Relatively small investment by Berkshire standards. Only $1.3 billion, so peanuts.

Moser: Well, I'm going to put you on the spot here, because I feel like this is always something to talk about, and I've got an idea of one I would use. But thinking of a Matt Frankel mistake, something reasonably that stands out to you as an investor, a mistake that Matt Frankel made in his portfolio, does anything stand out to you over the past couple of years, something you did that you wish you didn't do in hindsight? Buy or sell? An error of commission or omission? It could be either-or.

Frankel: Well, I probably shouldn't have sold Bitcoin in 2013.

Moser: [laughs] Very good. I'm glad. Good. It's humble. That's good.

Frankel: I've talked about this several times. I got in on the early days, really just to figure out how it works. Back when Bitcoin was in the single digits.

Moser: Yeah.

Frankel: No one knew that it would get to this point.

Moser: No. Shoot, I remember not all that long ago, I sold some Chipotle. Not all of it. This was a few years back, but I sold some Chipotle, the majority of the position, to reinvest that money elsewhere. Clearly, selling some of that Chipotle at, I don't know, it was $400 a share maybe at the time. In hindsight, do I wish I did that? Well, probably could have just left that money alone, and it would have done fine, and I reinvested that capital in other investments that are performing well, so I'm not sure. But that's one that I certainly think about from time to time.

Frankel: I have a better, more recent one. So, early 2020, we started hearing about this coronavirus that was going around Asia. Remember that?

Moser: Yeah, I think I've heard of that.

Frankel: When everyone didn't even pay it any mind. We got the first case, I think Washington state had a few cases at first, and everyone's like, it's going to fizzle out, whatever. The market went down in fear of the coronavirus. It wasn't even called COVID-19 at that point.

Moser: Yeah.

Frankel: It went down a little bit, and I put a bunch of money to work saying that this is a silly overreaction. In late February, I bought Occidental Petroleum, I bought Goldman Sachs, and then the pandemic hit and it turns out everyone was right. I was way too early. I wish I had put more money to work in late March and not so much in late February. I should've let, at the time, the COVID scare, I should've let it play out a little further. That was a mistake. Now I know to just be patient and let things play out before you react.

Moser: Yeah. Well, in hindsight, I guess the idea is we know we're going to make mistakes. It's just the real key is figuring out the lesson from it so that you can try to avoid repeating that mistake in the future, and it sounds like at least we were recognizing the mistakes and we just got to learn from them. 

What is takeaway No. 5? I think this is an interesting one. Much like Bitcoin, could potentially ruffle a few feathers. But what was takeaway No. 5?

Frankel: Well, it shouldn't surprise you to learn that Buffett is not a Robinhood trader. [laughs] If anyone was worried that he was going to jump on the platform and start buying GameStop, that's not the case. [laughs] He criticized Robinhood for the gamification of it, which we've done on the show a few times. We've talked about how Robinhood turned investing into a casino, and that was their biggest driver of success. I would even go so far as to say in 2020, when there were no casinos, there were no sports to bet on. So that became the casino. The No. 1 Reddit thread on investing is called WallStreetBets. You can't tell me that investing hasn't been gamified when that's what's getting all the headlines. So Buffett's caution, as he said, this creates its own reality for a while. And it does, because how many times have you seen people say on Twitter and stuff, "stocks always go up," in the past year --

Moser: [laughs] Stonks.

Frankel: -- Or things to that effect? Yeah, the stonks or whatever, and he says that nobody's going to tell you when the clock is going to strike 12 and it all turns into pumpkins or mice. In some stocks, it actually happened. Some of the really speculative SPAC stocks or some of their short, sweet stocks that we've seen did not always go up, lo and behold. He did say he's interested in reading Robinhood's IPO filing when it comes out, but he called it part of the casino group.

Munger had some equally nasty comments about it. He said it's awful that something like that brought investments from civilized men and decent citizens and brought it into Robinhood's platform. The two are not fans, and it's just like there are always people who are going to invest in the wrong ways. That's why Buffett's advice has been so widely followed for so many years. This dates way before the Robinhood thing ever started, people investing in the wrong way. But he said that just really adds to the gambling atmosphere of it. People have referred to Wall Street as a casino long before Robinhood got involved with things.

Moser: Sure. Yeah.

Frankel: So, it's not that Robinhood's making it into a casino. It's like the casino had the roulette table and Robinhood is just adding the flashing lights on top of it, which is kind of what's going on.

Moser: Well, they replied. They responded to that. There was a blog post this morning from the head of public policy communications of Robinhood to counter Buffett and Munger's comments, and ultimately, they feel that Buffett and Munger have insulted a new generation through their comments on Robinhood.

I guess it remains to be seen exactly how this all works out. I think the criticisms that have been lobbed up against Robinhood are fair. Again, building something like that from the ground up, you're bound to make some mistakes and learn some things along the way. So I will not be one to jump on the bandwagon saying that Robinhood's days are numbered. But perhaps they need to be a little bit more thoughtful on how they build out this platform if they want to really build the next generation of investors, as opposed to the next generation of traders or gamblers, because clearly, they are two very different things.

Frankel: Yeah, for sure. I'm not a Robinhood user. I've said that there are some cases where it could be a good platform to use, especially for cryptocurrency investors. I've made that case, where it's a good place to have everything in one place. But one thing is for sure, it has brought millions of people into the investing world.

Moser: Yes.

Frankel: Whether that's a good or bad thing, and they're doing it in the right way or not, it's up for debate. But they have really brought a new generation of investors into the markets. I'd like to see them double down on education and things like that, the way SoFi is doing.

Moser: Yeah.

Frankel: SoFi is partnering with Coursera to create personal-finance classes that it's giving to its members. I would love to see Robinhood doing something like that. That's really my big issue with Robinhood, is that they don't emphasize investing. They emphasize trading, it feels like. So that's my big issue with Robinhood.

Moser: Well, we shall see. Well, that's great stuff. Thanks for digging into that meeting, and like you said, of course, there are probably countless takeaways, but we've got to draw the line somewhere. Those were five really fun ones to talk about.

Before we wrap up the show today, we have a few earnings reports that we wanted to get to here that came out recently. Let's just take these one by one, and I'll go ahead and open up with Capital One Finance, Matt. What stood out to you for Capital One's quarter that was reported last week?

Frankel: Well, if you rewind to our bank earnings show last time, every bank beat their earnings, pretty much. Every bank had a good quarter. Especially when you compare it to the first quarter of 2020, when they were setting aside all these reserves. The sky was falling; this, that, and the other thing.

Capital One had a pretty good quarter even without that. Net income was significantly up over last year. A lot of that was reserve releases. Their net income was $3.3 billion. They released $1.6 billion in reserves out of that, about half of their income. Excluding any reserve activity, including their setting aside last year and their releasing this year, earnings were up 1% year over year. Not terribly exciting, but definitely not bad considering that interest rates have gone down considerably since the first quarter of 2020.

Total revenue was down 3%, thanks to lower interest rates for the most part. Non-interest expense was down 7%, which helped to offset that a little bit. They spent a lot less on marketing over the past year, for instance. Capital One's one of the most efficient banks I've heard of, especially out of the brick-and-mortar banks, which, before I had been to D.C. to Fool HQ, I'd never even known that Capital One was a real physical bank, because we don't have them down here. I thought it was just a prank or something.

Moser: They were building and everything.

Frankel: This was years ago. Yeah, here's a Capital One building. What's that? Then lo and behold, that's where the "Capital" comes from.

Moser: That's right,

Frankel: [laughs] But anyways, efficiency ratio is about a little under 53%, which is really good for a branch-based bank. Net interest margin is almost 6%. Most banks are at about 3%. That's because of the high amount of credit card loans, which are higher-interest loans. The credit card loan portfolio is down 7% year over year. We mentioned this last week, last time, when we did the bank earnings, consumers have had a lot of cash in the way of stimulus checks, things like that, extra cash being pumped in, and they've had less opportunity to spend. Think about how much you've spent traveling over the past year compared to the year before.

Consumers have just had less opportunity to spend and extra cash coming in. They are spending less on their credit cards. That's probably a good thing for society. [laughs] Lower credit card debt. But for Capital One, the credit card loan portfolio was down 7%. Their consumer loan portfolio, which is mostly auto loans, was up 2%. Overall, that balances out to down 3% on their loan portfolio.

The deposit base grew, but not as much as some competitors. They now have about $310 billion in deposits versus only about $243 billion in loans. They have some money to lend. Their loan portfolio is well covered by low-cost deposits. Nice capital structure there.

But all in all, I'd say it was a pretty good quarter. Are you a Capital One fan, being that you're more in their geographic area?

Moser: I'm not a Capital One account holder. I'm not a Capital One user. But the more I learn about the business, the more I actually become a fan of it. I like that they have such a strong focus on credit cards and being able to open up that product landscape for consumers with so many different levels. It feels like they've been able to do that very well. Whereas you look at another company, and maybe this just segues perfectly into this next earnings review. But a company like American Express, that has had to pivot from this identity of being a card for the wealthy to really having a card for everyone. With that in mind, American Express was another company that reported earnings here recently. We wanted to dig into that one as well. What stood out to you there for American Express this quarter?

Frankel: Well, their stock actually took a dive after earnings. Revenue was down 12% year over year, which, in a lot of the cases like we mentioned with Capital One, earnings were down year over year, pretty flat, but revenue did OK. Revenue wasn't down double digits like American Express' was. That, I think, bothered people a little bit. Comparing it to the first quarter of 2020, not very useful. But just like Capital One, about half of their net income for the quarter was reserve releases. They released a little over $1 billion. This all lowered loan volumes in credit card spending, just like Capital One.

Card member spending, just comparing it to a year before COVID -- like I said, 2020 is not very useful for comparison. Here is one thing that I found really interesting. Spending on American Express cards, excluding travel and entertainment, which people aren't spending money on still for the most part, was up 11% Europe from 2019 levels. That's pretty impressive. Everything other than travel and entertainment was nicely higher.

Unfortunately, American Express makes its money by selling cards based on travel and entertainment benefits. I mean, the key part with my American Express platinum card is being able to use airport lounges.

Moser: Yeah.

Frankel: Their big credit card partnership is Delta. They have the Delta-branded American Express cards. Of course, if you exclude travel and entertainment, it's going to look OK. But that's a big piece of the puzzle. I think that also spooked investors a little bit. They did say that they've seen an uptake on travel and entertainment spending in recent weeks. That's promising, but the fact that they had to back that out, to even compare it with two years ago, is not that impressive. They came out and said that 2021, they're viewing it as a transition year. They're investing; they're trying to grow their core business.

I mentioned I have the platinum card. They did a really great job of pivoting to some non-travel benefits that people were able to use in COVID times. They did a store credit at Home Depot; it was one of the big ones that I was able to use. They did online credit at Best Buy, online credit at Goldbelly -- which, if you haven't used Goldbelly, it's where you order food from restaurants from all over the country to have it shipped to you. They did credit for that for members, which we used and was really fun. They've really done a great job of engaging their customers. I don't know of any other major high-end credit cards that have really pivoted their benefits like that.

I'm still a fan of American Express. I may add to my position. That was the first financial stock I ever bought, almost 10 years ago.

Moser: Let's wrap it up, then, with SVB Group, because that's another one, SVB Financial. A company that is very popular in our Foolish universe, but I'm wondering, maybe don't get quite as much play as some of the others. What about SVB Financial stood out to you?

Frankel: This is Silicon Valley Bank, is what SVB stands for, for those who aren't familiar with the business. As the name implies, they're based in Silicon Valley. They loan a lot to tech businesses, start-ups, like that. Essentially, consider them a bank and a venture capital firm in one, is how I could describe it. The market's been fantastic for things like that. Think of how the Nasdaq has done over the past year. It's been a great year for the bank. Not terribly surprising, the bank's earnings exceeded expectations, but what was surprising is that it was the best quarter in the bank's history. The bank earned over $10 a share for the quarter. Best ever. The stock shot up 12% after earnings. The return on equity was 27%. Standard for a bank is about 10%, is what you're looking for.

Moser: Yeah.

Frankel: They grew their assets. A bank's assets might grow 5%-7% in a year, which would be considered a good year for a Bank of America. SVB's assets grew 90% year over year. Total client funds grew 71% year over year. That's a pretty impressive increase. As the CEO says, there are significant tailwinds at this point for even more growth. [laughs] Jason's dog just popped up. You just missed him again. [laughs] The CEO says that there's tailwinds for growth, which makes people really optimistic this isn't just a one-time thing.

Remember we mentioned last weekend, a lot of the banks said some of the things that were just temporary, like the higher trading revenue fueled by the volatility in the markets, higher investment banking revenue fueled by IPOs? If investment activity in the tech sector is really here to stay and it's going to ramp up for a while, then it's going to be a positive catalyst for this bank.

Moser: Well, that's something to keep an eye on for sure as we continue on through earnings season and the rest of the year. But Matt, I think for now, that is going to wrap it up for us this week. I really appreciate you not only taking the time to dig into those takeaways from Berkshire Hathaway's meeting, but also to dig into those earnings reports. As earnings-palooza rolls on, I mean, we just have so many companies announcing on a daily basis. It's nice to be able to jump in there and make some sense of it all. So thanks again.

Frankel: Of course. Always fun to be here.

Moser: We'll look forward to doing it again next week. Until then, remember, you can always reach out to us on Twitter, @MFIndustryFocus, or you can drop us an email at [email protected]. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Thanks as always to Tim Sparks for putting the show together for us. For Matt Frankel, I'm Jason Moser. Thanks for listening, and we'll see you next week.