Picture supply: The Motley Idiot
On 9 November, Warren Buffett posted his annual letter to Berkshire Hathaway shareholders — his remaining one earlier than retiring on the finish of the yr.
Quite than the same old firm replace, it was a poignant testomony to the legendary investor’s enduring rules. It captured Buffett’s philosophy on wealth, management and America’s future — delivered with the identical penetrating knowledge that has guided billions of traders.
He additionally used the chance to spotlight his religion in his successor, Greg Abel. The core message was clear: he’s “going quiet” after stepping down as CEO..
Nonetheless, he gained’t disappear fully. Quite than the exhaustive shareholder letters he’s well-known for, he’ll ship annual Thanksgiving messages.
The ‘greed’ drawback
In typical Buffett style, his final phrases weren’t all tender. He used the letter to ship a scathing critique of recent company extra, warning of a harmful sample rising in American enterprise.
He famous how new disclosure guidelines designed to embarrass executives into restraint have spectacularly backfired. The warning got here days after stories that Tesla CEO Elon Musk had been authorized a $1trn pay bundle.
Describing the rising development as poisonous, he stated: “Envy and greed stroll hand in hand.”
However whereas this can be commentary on company pay, it applies to the investing world too. A world the place too typically, extreme greed results in losses.
So what can traders study from his legacy?
Taking classes on greed from a person whose web value is $147.1bn could seem ironic, however few perceive the risks of extra higher than he does.
As one in all his most well-known quotes goes: “Be fearful when others are grasping and grasping when others are fearful.”
Contemplating the bloated valuations of a lot of at this time’s shares, being fearful appears acceptable. A great way to tackle that recommendation could also be to search for much less risky shares than Tesla.
Quite, it might to clever to contemplate one in all Buffett’s favourites, Coca-Cola. Within the UK, the London-listed Coca-Cola Europacific Companions (LSE: CCEP) is the biggest impartial Coca-Cola bottler by web income.
The £32.74bn firm has a Beta rating of simply 0.7, indicating low volatility. It was listed on the London Inventory Alternate (LSE) simply earlier than Covid however is already up 150% in 5 years.
Fast development with robust income
Since its itemizing, the corporate has expanded aggressively. It acquired the Australian bottling firm Coca-Cola Amatil in 2021 and a 60% stake in Coca-Cola Drinks Philippines in 2024.
Encouragingly, whole income has nearly doubled from £9.62bn in 2020 to £18.51bn this yr. Naturally, with a model as massive as Coca-Cola, that development is unlikely to lose steam any time quickly.
However robust branding and money movement apart, it does carry some dangers. Notably, round £8.5bn debt towards solely £7.72bn fairness. That leaves it with much less flexibility in financial downturns and a danger of economic troubles if earnings decline.
A remaining farewell
As one of many best traders to ever reside, Buffett might be enormously missed. However his legacy lives on in his classes — and now greater than ever, traders can be clever to take them to coronary heart.
For traders with a long-term mindset, a inventory like Coca-Cola Europacific’s value contemplating. In at this time’s risky financial setting, it might add stability and defensiveness to a portfolio.
