Beverage giant Coca-Cola Co (NYSE: KO) has been a staple to the investment portfolio of Berkshire Hathaway (NYSE: BRK) for years. With Warren Buffett stepping down as chairman of the conglomerate, the article examines the performance of the beverage giant since Buffett first started buying.
In 1988, Berkshire Hathaway acquired 14,172,500 shares of Coca-Cola at an average price point of $41.81. According to an annual letter from that year, Buffett stated, “In 1988, we made major purchases of Federal Home Loan Mortgage Pfd and Coca-Cola. We expect to hold these securities for a long time.”
Berkshire Hathaway would continue to add to its Coca-Cola position over the following years and see its share count blossom from several stock splits. The firm now owns 400 million Coca-Cola shares, making up around 11% of its portfolio. Berkshire Hathaway owns over 9% of Coca-Cola’s shares.
The article notes that Buffett’s big bet in 1988 marked one of the investor’s largest bets on a public company. If a person had invested at the same price and time Berkshire Hathaway had purchased its shares, that investor would have been rewarded today. A $1,000 investment at the time could have purchased 23.92 shares of Coca-Cola.
Shares of Coca-Cola split 2-for-1 in 1990, 1992, 1996 and 2012. These stock splits would have turned the $1,000 investment into 382.72 shares. Today, the $1,000 investment would be worth $33,755.90, based on a price of $88.20 at the time of writing, and not including dividends. The investment would be up a staggering 3,275.6% over the last 38 years.
