We recently published a list of Warren Buffett’s 10 Longest-Held Stocks. In this article, we are going to take a look at where The Coca-Cola Company (NYSE:KO) stands against other Warren Buffett’s longest-held stocks.
‘The Oracle of Omaha’
Known as the Oracle of Omaha, Warren Buffett will undoubtedly go down as one of the greatest and most prosperous value investors in history. During the booming stock market of the 1960s, the billionaire investor used his investment partnership to purchase Berkshire Hathaway, a struggling textile company in New England, which now stands as a global titan.
Buffett has often underlined the need to fully know the internal operations of a company before making any investments. His strategy focuses on finding companies with strong, scalable models that are ready for expansion and market leadership, as well as those that have much to gain from a subsequent increase in stock value. Both investors and market analysts have frequently praised this methodical, long-term investment strategy, particularly in light of Berkshire becoming one of the most recent non-tech companies to reach a $1 trillion market capitalization.
However, despite a generally strong market performance for much of 2024, Buffett appears to have shifted towards a more defensive stance. As interest rates climbed and economic conditions weakened, Buffett significantly reduced his holdings in companies experiencing rapid valuation increases. By late 2024, Berkshire had amassed over $325 billion in cash and cash equivalents, predominantly held in U.S. Treasury bills. This suggested that Berkshire avoided making major investments in popular stocks, even during periods of market optimism. That said, Warren Buffett’s decision to hoard cash might not be a random one. In fact, it mirrors strategies he has used in the past during previous financial downturns. As an example, the billionaire adopted a somewhat similar approach at the onset of the dot-com bubble in the early 2000s and again in the lead-up to the 2007-2008 financial crisis. In both these instances, Buffett foresaw market turbulence and positioned Berkshire to navigate the challenges by maintaining substantial liquidity.
Warren Buffett’s Stance on Cryptocurrency
Warren Buffett has repeatedly stated that he is not a fan of cryptocurrency. During Berkshire’s 2018 annual shareholder meeting, Buffett called Bitcoin “probably rat poison squared.” In Berkshire’s 2022 shareholder meeting, the billionaire once again stated:
“If you told me you own all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything.”
Recent reports, however, indicate that the Oracle of Omaha seems to be softening his stance on cryptocurrencies. Berkshire has invested in Nu Holdings, a digital banking company based in Brazil that supports the cryptocurrency market and operates its own platform. In a 2021 Series G funding round, Buffett’s company contributed $500 million, followed by another $250 million. Nubank Crypto, Nu’s cryptocurrency platform, was launched in 2022 and supports Bitcoin, Ethereum, and Polygon. Berkshire’s stake in Nu increased from 0.1% in the fourth quarter of 2022 to 0.4% in the third quarter of fiscal 2024.
Our Methodology
To create our list of Warren Buffett’s longest-held stocks, we analyzed his Q3 2024 investment portfolio and selected stocks that he has consistently held for the longest duration. These figures were sourced from the Insider Monkey Database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A row of factory workers assembling bottles of sparkling soft drinks on a conveyor belt.
The Coca-Cola Company (NYSE:KO)
Warren Buffett’s First Major Purchase: 1988
Berkshire Hathaway’s stake in Q3 2024: $28.74 billion
The Coca-Cola Company (NYSE:KO) is a global beverage industry leader that is best known for its iconic Coca-Cola drink. In addition to its main product, the company manufactures, distributes, and markets a wide variety of non-alcoholic beverages, including syrups, concentrates, and, more recently, alcoholic drinks. Despite Warren Buffett’s changing portfolio, one thing has remained constant over the last 30 years: his position in and love for The Coca-Cola Company (NYSE:KO). The billionaire almost never misses an opportunity to discuss why it is his favorite stock to own.
Piper Sandler reduced its price target for The Coca-Cola Company (NYSE:KO) shares from $74 to $73 in its most recent outlook on January 23. Despite this shift, the firm maintained an Overweight rating on the beverage giant’s stock. The change was made in response to increased currency headwinds expected in 2025, which Piper Sandler analysts factored into their financial models. The firm now expects a -2.5% impact from currency fluctuations, which is a larger problem than the -1.2% it previously predicted. In addition, The Coca-Cola Company (NYSE:KO) anticipates low-single-digit currency headwinds in 2025. The company also expects inflationary market pressures on prices to ease during the same year.
Coca-Cola’s revenue in the third quarter of 2024 was close to $12 billion, $290 million higher than analysts predicted. The company generated significant cash, as evidenced by its $2.9 billion operating cash flow and $1.6 billion free cash flow. Its impressive adjusted operating margin of 30.7% reflected its high profitability.
Overall, KO ranks 1st on our list of Warren Buffett’s longest-held stocks. While we acknowledge the potential of KO, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than KO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
