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The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: rando ✸  😊 😞
Number: of 22351 
Subject: Re: Dividends from Coke
Date: 09/04/25 9:56 AM
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Grok tells me that the Coke position has provided a total annual return of 11.4%, over an average holding period of 34 years. In comparison, Berkshire’s return since 1991 has been 14.6%. So the return of the Coke investment, despite the impressive dividend return on the original price, has actually been a drag on Berkshire’s performance.

I'm trying to follow the logic, but I don't quite get it. I guess it's true, tautologically for any firm, that if you sort their individual investments by ROI, a large portion of them (not necessarily half on a dollar-weighted basis, but likely more than that given the skewness of returns) will be below the firm's average ROI. But surely that doesn't imply that every one of those investments was subpar in the sense of not being a good one. I mean, if you imagine a hypothetical superinvestor that only invests in stocks that outperform the overall market, I think it would be weird to say that half of his/her investments were a drag on that performance. But maybe I'm inferring something you didn't mean.

Also important to remember that total return assumes reinvestment of dividends (at too-high prices for many years in Coke's case). But Berkshire didn't reinvest those dividends in Coke shares, so the actual returns to Berkshire generated by those dividends could have been much better or worse than the return on Coke shares. Hard to even estimate what those would have been, other than just saying they were probably around Berkshire's return on incremental invested capital.
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This community has written 21,861 posts about Berkshire Hathaway. The article-length ones it recommended most:
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