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Institutional investors hold a major stake in The Coca-Cola Company (NYSE:), controlling 62% of the shares. The top 25 shareholders account for 46% of this stake. Retail or individual investors often interpret large institutional investments as positive indicators, although caution is advised due to the potential risk of ‘crowded trades’.
A ‘crowded trade’ risk arises when multiple institutions own a stock, which could potentially trigger a sell-off in unfavorable market conditions. This risk is particularly prevalent for companies that lack a solid growth history. While Coca-Cola’s earnings and revenue records suggest credibility, reliance on institutional validation should be approached with caution.
Berkshire Hathaway Inc . (NYSE:) emerges as the largest shareholder of Coca-Cola, holding a 9.3% stake. Public companies and the general public own 9.3% and 28% of the shares respectively, with the former possibly maintaining a strategic stake. The top 25 shareholders collectively own less than half of total shares, indicating an absence of majority interest.
Hedge funds do not have significant investments in Coca-Cola, while insiders hold less than 1% of the company’s shares. However, this small percentage equates to US$1.6b worth of shares, making their trading activities significant in terms of value.
The high level of institutional ownership lends credibility to Coca-Cola but also introduces the risk of ‘crowded trades’. The company’s future will be influenced by analyst sentiments, its historic earnings and revenue performance, and existing warning signs.
InvestingPro Insights
The Coca-Cola Company has been a staple in the portfolios of many investors, and with good reason. According to InvestingPro, Coca-Cola has a perfect Piotroski Score of 9 and yields a high return on invested capital. These are strong indicators of a healthy financial situation.
Coca-Cola has also been consistent in rewarding its shareholders, having raised its dividend for an impressive 53 consecutive years. This consistency can be a comforting factor for investors looking for a stable return on their investment.
InvestingPro’s real-time data further illustrates Coca-Cola’s financial standing. With a market capitalization of 245.31B USD and a P/E ratio of 22.88, the company has a solid footing in the market. Over the last twelve months as of Q3 2023, Coca-Cola generated a revenue of 45.03B USD, growing at a rate of 6.35%. This growth, coupled with a gross profit margin of 59.14%, showcases the company’s ability to generate and retain wealth.
InvestingPro offers many more tips and real-time data metrics for Coca-Cola, providing investors with comprehensive insights into the company’s financial health and performance.
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