In Episode 4 of Becoming Berkshire, we are still in 1963.

This episode covers one of the strangest and most important investments in Warren Buffett’s early career: American Express and the salad oil scandal.

At the time, Buffett was still running Buffett Partnership Limited and was building his position in Berkshire Hathaway. American Express was caught in a major scandal involving fake soybean oil inventory, warehouse receipts, margin calls, failing brokers, and a fraudster named Anthony “Tino” DeAngelis.

The stock collapsed because investors feared the American Express name had been permanently damaged.

Buffett saw something different.

He looked past the scandal and focused on the core business. Customers were still using American Express cards. Traveler’s checks were still growing. Merchants were still accepting the brand.

The scandal was real, but the franchise was not broken.

This investment became a major turning point in Buffett’s evolution from Ben Graham style cigar butt investing toward buying great businesses with durable competitive advantages.

Most past episodes can be found in the Berkshire History playlist on YouTube.