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No. of Recommendations: 6
“Pop consumption per capita in the US has fallen 13 years in a row, and is around 3/4 its peak.“

“Mr Market offering 33.2 of trailing earnings.”

It is incredible that the market puts a value on KO like that.

Hard sell if you ask me.

I presume there is credit for the dividend and the global distribution network, the brands, everyone has to drink daily etc. But the main reason this was a great business was the flagship product and if that is actually declining and for clear reasons including previous over consumption, health/government policy, this is not the business it once was. Selling products with less dominant positions is not going to be as lucrative.

If Berkshire plays out it’s hand on this one from here the biggest hit might come from a fall in the PE.

I really don’t get it. Taxes, alternatives uses for the capital: fair enough but this looks more like a tobacco company trading like a growth consumer goods company.

The PE could get cut in half here and it would take decades to get it back in dividends.

Shows how hard it is for Berkshire these days. I can see why you would hold it even if no incremental return on capital opportunity if you owned 100% like a See’s Candies, but if the market is offering you your next 17 years return now, I say take it. (If the price falls 50% to a reasonable IV, that’s 17 years at 3% dividend).

Disclosure: Berkshire’s capital allocators have a track record somewhat better than mine. I support the premise of Jim’s KO posts only to learn something. I’ll leave the management of the portfolio to Warren and Charlie!
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