Eye on Insiders: Coca-Cola

Watching insiders is like participating in a weeks-long stakeout. You expect something to happen, but you don't know what. So you settle in, sip your coffee, and wait for clues to solving the big case.

Here, the "case" is direction: Which way is your stock headed? The "clues" come in the form of insider buying and selling action. Have a look at Coca-Cola (NYSE: KO  ) over the past year.

Insider Rating

Bullish
Multiple buys at lower prices over the past year, but earlier buy show a willingness to pay a premium to Wednesday's close.

Business Description

The world's largest distributor of soft drinks manages one of the world's best known and most-valuable brands.

Recent Price

$54.84

CAPS Stars (out of 5)

****

Percentage of Shares Owned by Insiders

0.60%

Net Buying (Selling)*

$20.46 million

Last Buyer (% Increase)

Muhtar Kent, President, CEO, and Chairman
13,000 shares at $38.93 apiece on March 3
(Purchase bolstered direct holdings by 10%)

Last Seller (% Decrease)

None over the prior 12 months

Competitors

PepsiCo (NYSE: PEP  )
Dr. Pepper Snapple Group (NYSE: DPS  )

CAPS Members Bullish on KO Also Bullish on

Johnson & Johnson (NYSE: JNJ  )

CAPS Members Bearish on KO Also Bearish on

Microsoft (Nasdaq: MSFT  )
Ford Motor (NYSE: F  )

Recent Foolish Coverage of KO

Pepsi's iPhone Blunder
5 Stocks Approaching Greatness
Bellying Up to FEMSA

Sources: Form 4 Oracle, Capital IQ, and Motley Fool CAPS. (Data current as of Oct. 14.)
*Open market sales and purchases only.

What we're tracking here, and why
Insider buying data can be confusing. Here, I'm concentrating only on buying and selling conducted in the open market. With most of these transactions, insiders control the timing. Other times they're buying or selling under the purview of a 10b5-1 plan. Either way, personal holdings are being bought and sold.

Those personal holdings matter the most -- they're the shares executives hold for investment, rather than compensation. Employee stock options are different; they're compensatory in the purest sense. I've stripped out options-related buying and selling from the calculations you see above.

The Foolish view: Bullish
Is there any stock out there more deserving of the moniker "no-brainer buy" than Coca-Cola? After more than a century in business, you'd think investors would have come to appreciate its global distribution network, steady growth, and predictable dividend payments.

You'd think, but you'd be wrong. The Wall Street Panic of 2008 torched everything, including shares of Coke: The stock trades for 46% above its 52-week low of $37.44 a share as of this writing.

Coke's business hasn't changed much since. A distribution deal with Hansen Natural (Nasdaq: HANS  ) remains, and the stock continues to yield better than 3% annually in dividend payments.

Executives and board members like that story, but they liked Coke most when others hated it. CEO Muhtar Kent and director Barry Diller bought shares in early March, within spitting distance of the year's lows. Diller, in particular, spent close to $20 million to add to his Coke stake, which had consisted of just 1,000 shares.

But there's more to this story than just good timing. From February to May of last year, three separate insiders bought shares for more than $55 apiece. Motley Fool Inside Value advisor Philip Durell calls Coke one of his service's "core" picks. The implication? This is a stock to buy to hold for a lifetime, and then pass on to heirs.

Do you agree? Disagree? Log into Motley Fool CAPS today and tell us how you would rate Coca-Cola.

And if you want me to take a Foolish peek at the insider action of your favorite stock, email me here or use the comments box below. I'll write this column as often as you, our readers, demand.

Get more of the inside scoop with related Foolishness:

Coca-Cola, Johnson & Johnson, and PepsiCo are Income Investor recommendations. Coca-Cola and Microsoft are Inside Value picks. Hansen Natural is a Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy has its eye on you.


Read/Post Comments (3) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 15, 2009, at 3:36 PM, ozzfan1317 wrote:

    Thier a great compsny with a solid dividend built to last forever whats not to love?

  • Report this Comment On October 15, 2009, at 4:38 PM, Varchild2008 wrote:

    ozzfan1317 wrote,

    "Thier a great compsny with a solid dividend built to last forever whats not to love?"

    1. The Cancellation of the Green Sugar Packed Soda Beverage known as "SURGE."

    VARCHILD's BRING BACK SURGE CAMPAIGN HAS NEVER ENDED!!!

    2. The fact that VAULT had more sugar in it than taste.

    3. They don't have Mountain Dew

    4. They don't have VERNORS

    5. The best years for HANSEN's Monster Energy Drink were with (DPS) distribution.

    6 MOXIE Cola then Dr. Pepper all came into being before there ever was a COCA-COLA.

    7. Buying a Coca-Cola is at least 10 cents more expensive than buying a FAYGO (FIZZ).

    8. Coca-Cola's Stupid "Butterfly" commercial this year was real bad.

    9. Any fast food restaurant you go to will have much better choices like Dr. Pepper, Hi-C Punch, than buying a Coca-Cola.

    Finally....The #1 Reason NOT TO LOVE (KO):

    10. Foreign Exposure while the Dollar is taking a Dive is not Bullish when it comes to Currency Exchange.

    Of course I jest...I'm a 526 share count holder of (DPS) just goofing off. But I bet no one knew that?

  • Report this Comment On October 15, 2009, at 10:18 PM, KOOlympics wrote:

    Look for another 3-4 cent quarterly dividend increase to be announced in February 2010 effective April 2010. Healthy dividend increases only add to the life of this great company.

    Life adds Coke to your portfolio...and to the even longer term portfolios of your children.

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