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Bill Ackman has called Warren Buffett his “great professor (1)” of the <a href="https://bitcomme.com/a-stock-market-correction-could-be-coming-heres-why-im-still-investing/” title=”A Stock Market Correction Could Be Coming. Here's Why I'm Still Investing.”>investing business. Buffett’s drink order, apparently, still came as a surprise.
On an episode of the Equity Mates Investing podcast (2) released Oct. 28, the billionaire founder and CEO of Pershing Square recalled hosting Buffett for dinner at his home “years ago.” Knowing his guest’s favorite drink, Ackman said he’d stocked up on Cherry Coke (NYSE:KO) — but he still offered Buffett still or sparkling water. Buffett declined and asked for a Coke.
“But I said, you know, ‘Don’t you drink water?'” Ackman recalled. “And he said, ‘Bill, I haven’t had water in 48 years.'”
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It’s not the first time Ackman has taken aim at Buffett’s favorite drink. At a 2015 symposium celebrating Buffett’s 50 years at Berkshire (3), he singled out Berkshire’s Coke stake.
“Coca-Cola has probably done more to create obesity and diabetes on a global basis than any other company in the world,” Ackman said at the time. A Coca-Cola spokesman called the comments “irresponsible.”
Is the 48-year claim literally true? Hard to say. Ackman didn’t say when the dinner took place, and Buffett, 96, hasn’t commented publicly. His soda habit, at least, is well documented: Buffett told CNBC in 2019 that he drinks “probably five 12-ounce Cokes a day.” As it happens, 48 years is the same number Buffett used in his 1985 shareholder letter (4), when he converted to the new Cherry Coke after “48 years of allegiance to another soft drink.”
Either way, the soda habit has been very good to Berkshire Hathaway (NYSE:BRK.B).
The $1.3 billion bet that kept its fizz
Berkshire started buying Coca-Cola stock in 1988, months after the Black Monday crash, and finished building its stake in the mid-1990s. Today it owns 400 million shares (5), or roughly 9% of the company, at a total cost of about $1.3 billion. At the stock’s Oct. 30 close of $94.08, that stake is worth roughly $37.6 billion.
But the real payoff is the dividend. On Feb. 19, Coca-Cola raised its quarterly payout (6) to 53 cents a share, its 64th straight annual increase. That works out to $2.12 a share per year, or about $848 million for Berkshire annually. In other words, Berkshire now collects roughly 65% of its original investment back in cash every year just for holding on.
