Not many people would argue with the fact that Warren Buffett is a "master investor." So I guess it was to be expected that when Buffett decided to double down on credit cards last quarter, he made a beeline for MasterCard (NYSE: MA). It was to be expected … but that doesn't mean it was the right decision.

In its most recent filing with the SEC, Buffett’s Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) confirmed last night that it's now the proud owner of 216,000 shares of the second biggest name in charge cards. The $54 million investment pales in significance to the firm's multi-billion-dollar stake in rival card issuer American Express (NYSE: AXP). But for my money, Buffett could have done even better had he bet on the No. 3 horse in this race: Visa (NYSE: V).

Don't get me wrong. All three card issuers are fine companies. It's just that of the three, Visa offers the best bang for the buck. I'll illustrate with a few numbers:

Company

P/E

EV/FCF

Growth Rate

American Express

14.0

14.8

10.2%

MasterCard

18.8

16.7

17.5%

Visa

20.5

15.5

18.6%

P/E and growth rate data courtesy of finviz.com. Enterprise value-to-free cash flow calculated using most recent data from Capital IQ, a division of Standard & Poor's.

As you can see, the credit card company Buffett already owned, AmEx, is pretty well overvalued as it is. And since Berkshire already owns a sizeable slug of AmEx stock, you can see why when hunting for credit card opportunities, Buffett didn't take American Express. But what about MasterCard?

On the surface, it looks like a fine choice. The 18.8 P/E's no bargain, but it's lower than Visa's, and not that much higher than its growth rate. MasterCard also boasts free cash flow higher than its reported net income, and has a lower EV/FCF as a result. So the Oracle's decision makes some sense. All I'm saying is that Buffett could have done better.

He could have -- he should have -- bought Visa instead. You see, Big Blue may sell for the highest P/E ratio, but in fact Visa generates so much more free cash flow that its EV/FCF drops all the way to the bottom of the list. Viewed from this perspective, Visa's actually the cheapest of the bunch -- and to slather some icing on the cake, it pays a better dividend than MasterCard, too.

Foolish takeaway

Buffett should have bought Visa. In this one instance, you're better off not buying it like Buffett.

Will an overpriced MasterCard swipe Buffett's title as the infallible Oracle of Omaha? Add the stock to your Watchlist and find out.

Fool contributor Rich Smith does not own shares of any company named above, but Motley Fool newsletter services have recommended Berkshire Hathaway and Visa. The Motley Fool owns shares of Berkshire Hathaway. The Motley Fool has a disclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors