Buffett’s Berkshire Hathaway Inc. (BRK.A) (BRK.B): The Ultimate Buy & Hold Bonanza – The Coca-Cola Company (KO)

Coca-Cola Company is much more than just the flagship brand. Its portfolio has exploded during Berkshire’s ownership to more than 500 beverages. Beverages made specifically for the tastes of consumers in virtually every country of the world. While Coke itself has relatively flat sales in North America, sales of PowerAde and Minute Maid are booming–up nearly 10%.

Coke Continually Shrinks Share Count, While Growing Business

Berkshire’s do nothing approach to managing its mega Coke holding the past quarter century will likely prove to be a brilliant strategy the next quarter century, too.  One reason: Coke increases Berkshire’s share of ownership every year: Coca-Cola is committed to buying back up to $3 Billion of its stock each year thanks to its large cash position, strong free cash flow, and pristine balance sheet. In recent years it’s fueled growth by buying up bottling operations around the globe, including Coca-Cola Enterprises.

Back in the late ’80s, Warren Buffett identified Coca-Cola as an emerging global giant with a product and global distribution system in place that assured generations of strong growth. Boy was he right! What was a North America centric company then is now only 43% developed nation sales, 37% developing nation sales, and 20% emerging markets. Africa, Eurasia, and Latin America sales are growing rapidly.  Want a safe emerging markets play headquartered in the US?   Coke estimates by early next decade it will be exactly diversified 33%/33%/33% among those 3 global sectors.

And the sparkling 10% Dividend Increase this week is only its historic average increase. There are simply no other companies that perform so consistently over not just years…but generations.

That’s why Buffett owns 400 Million Shares and hasn’t sold a single share. He called it a permanent holding 25 years ago. And he meant it.

The lesson: buy truly great businesses at fair prices and get out of the way. They’re irreplaceable.

The article Buffett’s Berkshire: The Ultimate Buy & Hold Bonanza originally appeared on Fool.com and is written by John Mooney.

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