Over the last few quarters, Warren Buffett has been a huge seller of Apple stock. That's notable considering Apple is his biggest holding at Berkshire Hathaway. Apple isn't the only company Buffett is selling. He has also issued sell orders for another major holding, Bank of America. Yet there's one iconic business that Buffett refuses to sell. Berkshire's portfolio still holds 400 million shares of this business -- a business that has been a mainstay of that portfolio for decades.
NYSE: KO
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Will Warren Buffett ever sell Coca-Cola stock?
In 1987, Buffett made one of the biggest investments of his early career: a $1 billion bet on Coca-Cola (KO 0.12%) stock. At the time, stock markets were crashing, but Buffett believed in Coca-Cola's competitive advantages, namely its iconic brand image and global distribution capabilities. Coca-Cola has been in Berkshire's portfolio ever since.
As of last quarter, Berkshire reported holding 400 million Coca-Cola shares worth nearly $29 billion. This year, Coke stock hit new all-time highs. And yet Buffett still refuses to sell. Why? It comes down to two simple reasons.
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The first reason Buffett is likely holding on to Coca-Cola stock is that his favorite holding period is "forever." When he finds a business he can understand that possesses durable competitive advantages, Buffett has been loath to sell, even if shares get overvalued from time to time. "We are just the opposite of those who hurry to sell and book profits when companies perform well," he once explained.
The second reason is a bit more specific to Coke. Over the decades, Coca-Cola has generated huge returns on capital despite minimal capital investment due to a well-designed business model, which has it sell concentrate and licensing to bottlers that then handle the more capital-intensive phases of distribution. This essentially makes Coca-Cola a portfolio of beloved brands -- a business model that requires far less capital than owning the entire supply chain.
