One of the great maxims of traders and Wall Street pros is to follow the "smart money."
I'm not much for the thesis that institutional shoppers tend to make smarter investing decisions, but many of you who've read my ruminations on insider buying say you'd also like to know how the Big Money is betting. Your wish is my command.
Next up: Coca-Cola
Foolish facts
|
Metric |
Coca-Cola |
|---|---|
|
CAPS stars (out of 5) |
**** |
|
Total ratings |
5,608 |
|
Percent bulls |
94.7% |
|
Percent bears |
5.3% |
|
Bullish pitches |
735 out of 794 |
|
Highest rated peers |
Heckmann Corp., PepsiCo |
Data current as of Nov. 27.
For investors, Coke is synonymous with Warren Buffett. The Oracle of Omaha first bought shares decades ago, and as the table below shows, Berkshire Hathaway
Fools see no reason to sell. Not only is the stock recommended by both our Motley Fool Inside Value and Motley Fool Income Investor services, but many of the everyday investors rating the stock in CAPS also like it for the very long term.
"US citizens purchase over 1 Coke product a day on average, while Chinese [citizens] purchase less than two a month, on average. Growth opportunities abound. Plus, any product that criminals ask for [in] their last meal, and [which] has been outstanding for a century is worth investing in," Foolish investor Eons wrote in September. I'm inclined to agree.
Institutional ownership history
|
Top Owners |
2007* |
2008* |
2009* |
Latest* |
|---|---|---|---|---|
|
Berkshire Hathaway |
200,000,000 |
200,000,000 |
200,000,000 |
200,000,000 |
|
BlackRock |
14,215,056 |
15,190,490 |
123,715,138 |
107,856,478 |
|
The Vanguard Group |
60,715,128 |
66,854,347 |
77,418,793 |
85,104,264 |
|
State Street Global Advisors |
67,178,207 |
83,267,545 |
84,690,250 |
83,236,992 |
|
Capital Research and Management |
116,392,000 |
103,873,000 |
129,783,300 |
78,618,900 |
|
TOP 25 TOTAL |
710,692,368 |
773,783,206 |
915,745,844 |
900,823,023 |
Source: Capital IQ, a division of Standard & Poor's. *Indicates the number of shares owned.
And so, it would seem, do most institutional investors. They have good reason to bet on Coca-Cola. At current prices, the stock yields 2.7%. Management has also increased its per-share dividend payout by 9.7% a year over the past five.
But Eons is right; Coke's growth story doesn't begin and end at the dividend. North American sales accounted for just 27% of revenue last year. In China, rural consumers are only now discovering Coke, and they seem to like what they taste.
Add it up, and you have an increasing appetite for Coca-Cola shares among Big Money investors. Vanguard and State Street, in particular, have substantially increased their exposure to the soda king's stock.
Competitor and peer checkup
|
Company |
Institutional Ownership |
Insider Ownership |
|---|---|---|
|
Coca-Cola |
61.52% |
4.98% |
|
Dr Pepper Snapple Group |
95.54% |
0.11% |
|
Fresh Del Monte Produce |
64.67% |
38.92% |
|
Hansen Natural |
76.80% |
1.67% |
|
PepsiCo |
67.93% |
0.12% |
Source: Capital IQ. Data current as of Nov. 27.
In terms of my soft drink choices, I've recently taken a liking to Dr Pepper, but in this table it's Coca-Cola that impresses me. Board member James Williams, chairman of Coke's finance committee, owns more than 4% of the shares outstanding. With that much capital at stake, he's unlikely to permit bookkeeping shenanigans.
At the same time, institutions own only 62% of Coke's outstanding shares. Plenty of buying room remains for Big Money investors seeking to combine a global growth opportunity with a generous yet safe dividend. I think they'll come around, which is why I've rated the stock a long-term buy in my CAPS portfolio.
Now it's your turn to weigh in. Would you buy Coca-Cola at current prices? Let us know what you think using the comments box below. You can also recommend other stocks for me to evaluate by sending me an email, or replying to me on Twitter.
Interested in more info on Coca-Cola? Add it to your watchlist by clicking here.
