On February 10 Coke had a great day and the stock rose by 3% on a decent earnings report.
This reaction has to be a serious relief for Warren Buffett. There is no investment more synonymous with Berkshire Hathaway than their investment in Coca-Cola. As a matter of fact, Buffett sort of got his start as an investor by purchasing six-packs of Coke for a quarter and then selling each bottle for a nickel to gain a 20% return.
Right now Berkshire Hathaway has 400 million shares of Coca-Cola. They own 9.1% of the company, and the Coke shares make up 14% of Berkshire Hathaway’s total public holdings in equities.
Today’s rise in price adds another $500 million to the coffers of the Oracle of Omaha. The entire Berkshire Hathaway stake in Coca-Cola is now worth over $17 billion.
But that isn’t even the entire story. Coke is lagging the S&P 500 for the last one, two and five year periods.
Berkshire Hathaway, on the other hand, is dramatically outperforming Coca-Cola on all timescales as Buffett has expanded the company into other areas.
Investing in Coke is a testament to Warren Buffett’s dedication to diversification, and the Oracle of Omaha has felt some pressure to step in to help the world’s largest soda company. With the price action today Warren Buffett and Coca-Cola have both bought themselves some more time before the Oracle has to step into the situation publicly.