Warren Buffett — the Oracle of Omaha — is widely regarded as one of the greatest investors of all time.
Berkshire Hathaway Inc. (NYSE: BRK-A) has returned tens of thousands of percent over the years and consistently outperforms the market. Buffett bought the company in 1965 for just $8.3 million and it’s now valued at nearly $700 billion, about a 10 million percent return.
But one of Buffett’s all-time best picks and longest held positions is one you might not expect. Berkshire Hathaway first started buying Coca Cola Co. (NYSE: KO) shares in 1988 and has continued to collect shares ever since. Berkshire Hathaway now owns 400 million shares of Coca-Cola worth a whopping $22 billion or about 8% of the company.
By the time Buffett started buying the company in 1988, the stock was at a few dollars a share, so Berkshire Hathaway is making huge profits in the company. Coke also issues a dividend of 44 cents a quarter, so it gets nearly $1 billion a year in dividends on top of that.
While it’s unlikely you’ll see returns like this in Coca-Cola stock anymore due to its size, there are still valuable choices in the industry. TruBrain, for example, is a startup that makes drinks and supplements focused on cognitive health and is currently valued at a fraction of what Coke was when Buffett invested in the company in 1988.
Buffett loves Coca-Cola stocks for one reason – the same reason he loves every company he invests in: where the. This has two meanings. First, he is notorious for only investing when it’s the right price and not a penny more. Coca-Cola stocks had a good price at the time with an interesting competitive advantage. Coca-Cola owns nearly 50% of the US soft drink market, so as long as people drink soft drinks, Coke will thrive.
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Second, and perhaps more importantly, is Coca-Cola creates value. Buffett likes “productive assets” because they make money and make a product. The legendary investor has stayed away from things like cryptocurrency because it pays nothing.
Buffett has mentioned Coca-Cola in this sense before. He noted how Coca-Cola produces nearly 2 billion servings of liquor per day. So if Coke needs to make more profit, it could raise its drink prices by just 1 cent per serving and produce an additional $20 million per day.
Picks like this are Buffett’s bread and butter, and he still loves Coca-Cola broth just as much as the day he bought it. Coca-Cola has maintained its market dominance for decades, and as long as it maintains that, Buffett is unlikely to sell.
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