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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:BRKa) 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.
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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