Bill Ackman Asks Warren Buffett about Coca-Cola's Buybacks..

Stock Buybacks increase the earnings per share and therefore cause the stock prices to go higher, making more money for the shareholders who invested in the stock.
🎥 Dive into the 1998 Berkshire Hathaway annual meeting with this insightful video covering Bill Ackman's critical question to Warren Buffett about Coca-Cola's stock buybacks!
💼💡 Explore the nuances of share repurchases, the enduring principles of Buffett's investment philosophy, and the impact of capital allocation decisions on long-term shareholder value.
📈 Don't miss this deep dive into timeless lessons for investors! 🌟

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0:00 - Bill Ackman's Question
0:33 - Buffett's Answer
05:04 - Final Thoughts

#WarrenBuffett #BillAckman #Lunchinvesting

[lunchinvesting]

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[hammerfist]

I agree with Munger that buybacks are often done for the wrong reasons. Legitimate reasons include buying up excess outstanding shares for employee stock options. Coca-Cola is a well run company, but when I was at Pepsi, I noticed Coke was lagging behind Pepsi in efficiency of operations at the distribution level. Pepsi's logistics were better or equal to Coke's, especially in "Distribution Cost per Unit" or "Delivery Cost per Unit." Coca-Cola could have invested stock buyback money to improve in that area, with a significant long-term payoff. Quite likely it's incredible 24% profit margin for 2023 would have been closer to 30%.

[gabisammut]

Great question from a great investor. Keep up the amazing videos!!

[johnking]

Ackman was right .
Very right.
The question was right before the absolute peak.
Infinity and Ubiquity were the descriptions of Coke then.
It was not a good idea.
Not buying Gatorade was also a not so good idea.
It would have been a steal to give them stock.
In fact it was a very bad idea.
Coke is up roughly 50% in 27 years.
It turned out to not be an inelastic
demand product.
The EM growth slowed.
Tastes changed.
And unfortunately they passed on or missed many products.
Management has had a very difficult time.
Past was not prologue.

[GastonKe]

Back in 1996-1997, the return on equity of coca cola is around 60%, even if you bought it at 40 p/e, or initial earnings yield of 2.5%, your investment will quickly approach high double digit returns in just a couple of years

[tbaloni]

Knowing what you own and sticking with the company that you believe in is important with investing. Buffett knows and believes in his companies he wouldn’t invest in anything else and compounding his returns with buybacks or dividends hikes is all the better for holding in the next 20 years

[wallstfun]

Ironically, Buffett never did a Berkshire buyback from 2009-2015
I’m sure he wishes he did.

[MrMattandy]

Why don’t they buy more KO shares. 400 million to 800 million shares

[NomadJoe]

This question shows how Bill Ackman will never be Warren Buffett

[eddylauterback]

Ackman is constantly going "off the rails", wasting time starting Grease fires and not looking after his investors.