KO Stock: Why Warren Buffett, Ray Dalio and Ken Griffin Back Coca-Cola

The ‘magnificent seven’ stocks are popular with major investors, but their non-tech holdings give an insight into their core investment strategies. Here’s what we can learn from the portfolios of Berkshire Hathaway Founder Warren Buffett, Bridgewater Associates Founder Ray Dalio and Citadel Founder Ken Griffin.

‘Super investors’ like Warren Buffet are known for maintaining a foothold in big-name tech stocks, but that is only part of the story.

“The ‘magnificent seven’ is measured to be a bit frothy but not in a full-on bubble”.

So said Ray Dalio, Founder and former CEO, Chief Investment Officer and Chairman of Bridgewater Associates, in an analysis posted in February’s issue of his monthly LinkedIn newsletter Principled Perspectives.

Dalio observed that the group of stocks was “fairly priced” overall, adding that Alphabet [GOOGL] and Meta [META] are “somewhat cheap” but warning that Tesla [TSLA] is “somewhat expensive”.

While some might think the magnificent seven have rallied too hard, Dalio is confident that it’s not a bubble because there is ongoing uncertainty about the true impact AI will have.

Dalio increased his stake in Nvidia [NVDA] by 458% in Q4 2023, boosted his Alphabet shares by 30%, and started a new position in Apple [AAPL]. He also trimmed Microsoft [MSFT] by 2%.

Citadel founder Ken Griffin is invested in all seven magnificent seven as of 31 December 2023, while Berkshire Hathaway’s Warren Buffett holds only Apple and Amazon [AMZN].

While the magnificent seven have performed impressively in recent months against the backdrop of higher inflation and interest rates, not to mention the spectre of recession, the problem is that they’re all tech stocks, which means they offer little diversification as an investment focus.

Here are some non-tech stocks that all three super investors added to or maintained during Q4 2023.

Three Picks Across Super Investors’ Portfolios

Chevron [CVX]

Buffett bought approximately 15.8 million shares in Q4 2023, increasing his holding by 14.4%. Griffin more than doubled his position, purchasing approximately 1.6 million shares. Meanwhile, although Dalio added just 69,500 shares, he boosted his stake by 952.5%.

Coca-Cola [KO]

While Dalio reduced his holding by 11% or approximately 993,000 shares in Q4 2023, the stock is the fourth-biggest holding in his portfolio as of 31 December. Griffin bought 2.8 million shares, increasing his position by 90.4%. Buffett hasn’t made any Coca-Cola trades since his last purchase in Q3 2012, but the stock is his fourth-biggest holding, worth $23.6bn and accounting for 6.8% of Berkshire Hathaway’s portfolio at the end of Q4 (the above image shows a Cherry Coke bottle featuring Buffet’s face, on a shelf at a convenience store in Beijing in 2017).

Kraft Heinz [KHC]

Griffin snapped up approximately 6.4 million shares, boosting his holding by 413.6%, while Dalio increased his by 7.7% with the purchase of 118,000 shares. Buffett maintained his position, which he hasn’ t added to since first buying in 2015. It remains the seventh-largest holding in his portfolio, worth $12bn and accounting for 3.5% at the end of Q4.

There are a number of other stocks that all three are holding, including American Express (AMEX) [AXP], Kroger [KR], Mastercard [MA] and Visa [V]. Until Q3 2023, they also all had stakes in Johnson & Johnson [JNJ] and Procter & Gamble [PG], but Buffett closed both his positions in the second half of last year.

Super Investors Value Diversified Dividend Payers

The likes of Chevron, Coca-Cola and Kraft Heinz are beloved by super investors because they offer steady growth and have diversified businesses that don’t rely on a single brand, product or service to make money.

For example, Chevron’s energy operations cover exploration, production and refining; it has both upstream and downstream businesses.

These three stocks are also regular dividend payers.

“Both AMEX and Coke will almost certainly increase their dividends in 2024—about 16% in the case of AMEX—and we will most certainly leave our holdings untouched throughout the year,” noted Buffett in his February annual shareholder report.

Investors often pore over Buffett’s 13F filings to find out which stocks he has taken a position in, added to, sold or exited. Berkshire Hathaway’s portfolio and performance are considered by many to be a barometer for the health of the US economy.

Close attention is also paid to Dalio’s stock picks due to his ‘All Weather’ strategy, which is designed to create a portfolio that should perform well in all market conditions, especially during periods of high inflation and high-interest rates.

Super Investors’ Economic Outlook

So, where do these super investors see the US economy heading?

In a letter to investors published on 1 April, Griffin said he foresees modest economic growth over the coming quarters, though he warned that the US national debt is a “growing concern that cannot be overlooked”.

Back in September 2022, Dalio had expected the US to slide into a recession in 2023 or 2024 due to high-interest rates, but admitted to the Wall Street Journal last week: “I was bearish on the economy … I got it wrong.”

Buffett hasn’t commented on the current state of the US economy, but he’s likely to make remarks at Berkshire Hathaway’s upcoming annual shareholder meeting on 4 May.

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