Background of the Investment
Warren Buffett’s investment in Coca-Cola in 1988 is considered one of the most iconic and successful stock market decisions in financial history. Buffett began building a position in Coca-Cola in 1988 following the stock market crash of 1987, investing a total of $1.3 billion over several years. Today, Berkshire Hathaway holds 400 million shares (approximately 9–10.9% of the portfolio), currently estimated at over $25 billion.
Performance of a Hypothetical $1,000 Investment
- Without Dividends: At a share price of ~73.08 USD (as of April 2025), the originally acquired shares through four stock splits (1990, 1992, 1996, 2012) would today amount to 382.72 shares worth about $27,969.
- With Reinvested Dividends: Including all dividend payments and their reinvestment, the value of the same $1,000 investment amounts to an impressive $36,487 (as of April 2025). This corresponds to a return of over 3,534%.
Key Factors for Success
- Economic Moat: Coca-Cola’s global market dominance and recognizable brand created a sustainable competitive advantage.
- Dividend Growth: Annual dividend payments increased consistently – a central component of Buffett’s “buy-and-hold” strategy.
- Long-Term Perspective: Berkshire Hathaway has not sold a single share of Coca-Cola since the purchase.
Relevance for Retail Investors
- 🧩 Uncompromising focus on companies with stable cash flows and global scalability.
- 🕰️ Patience as Key: The period of over 35 years underscores the power of compounding.
- 📊 Portfolio Diversification: Despite the success, Buffett’s approach highlights the importance of concentrated positions in “chosen champions”.
The figures vividly illustrate the potential of long-term value investments – especially in companies with monopolistic market positions and consistent profit distribution policies.