In the latest quarterly financial statement from Berkshire Hathaway Inc (NYSE: BRK-A)(NYSE: BRK-B), it was revealed that Warren Buffett is betting big on homebuilder stocks.
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The filing also revealed that Buffett maintained holdings in some of his preferred stocks, including a position of 400 million shares in the beverage behemoth, Coca-Cola Co (NYSE: KO).
Here’s a look back at the firm’s very first purchase and how investors would have done had they invested in Coca-Cola stock when Buffett did.
What Happened: Berkshire Hathaway’s portfolio includes holdings in top public companies such as Coca-Cola, Apple Inc, American Express and more. The holding company also owns many well-known companies, including Dairy Queen, Duracell, GEICO and Fruit of the Loom.
In 1988, Warren Buffett and Berkshire Hathaway made a splash by buying shares of Coca-Cola. By the end of the year, Berkshire Hathaway had acquired 14,172,500 shares at an average price point of $41.81.
In an annual letter that year, Buffett, who is said to drink five cans of Coke or Cherry Coke a day, addressed the purchase of Coca-Cola shares.
“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,” Buffett said. “In fact, when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
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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 shares of Coca-Cola, which makes up around 6.9% of its portfolio. Berkshire Hathaway owns over 9% of Coca-Cola’s shares.
Investing $1,000 in Coca-Cola: The substantial investment by Buffett in 1988 marked one of the largest bets on a public company by the legendary investor.
Had someone invested in Coca-Cola at the same price and time as Berkshire Hathaway, they would be reaping significant rewards 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. The stock splits would have turned the $1,000 investment into 382.72 shares.
Today, the $1,000 investment would be worth $23,196.66, based on a price of $60.61 at the time of writing, and not including dividends.
The investment would be up a staggering 2,219.7.0% over the last 35 years.
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Not every investment made by Buffett will be a winner, but the legendary investor has proved that many of Berkshire Hathaway’s top holdings have seen a nice return on investment when held for many years.
