The 37-year position Berkshire will never sell — and the IRS tax fight hiding in the footnotes.
Berkshire has owned Coca-Cola (NYSE: KO) since 1988 and has not sold a share in 37 years. A fixed 400M-share stake has drifted to ~9.3% of the company purely through buybacks, and the ~$1.3B cost basis throws off ~$816M a year in dividends — a yield-on-cost north of 60%. The read: a wide-moat permanent holding fairly priced at ~26x, where the right action is to hold, not add.
The full case study, the 3-statement model, and the IC deck — all free, all built from public filings.
Berkshire bought Coca-Cola in 1988 and has not sold a share since. The stake has been a fixed 400M shares for decades, yet it has drifted to ~9.3% of the company purely because Coca-Cola keeps retiring its own stock. Against a ~$1.3B original cost basis, the position now pays ~$816M a year in dividends — a yield-on-cost well north of 60%. This is the textbook example of what Buffett means by “our favorite holding period is forever.”
This is not a wide-moat compounder bought cheap; it’s a wide-moat compounder fairly valued at ~26x earnings. The practitioner verdict is to hold, not add: the moat is intact, the dividend is durable, and the buyback-driven ownership creep does the compounding work without new capital. The interesting analytical work is not the valuation — it’s the tax footnote.
Buried in Coca-Cola’s filings is an IRS transfer-pricing dispute most readers skim past: a roughly ~$14B exposure across 2010–2025, against which the company carries a $520M reserve, with an effective-tax-rate effect of ~3.5 points and an outcome that hinges on the 3M v. Commissioner appeal. We quantify it as a managed tail risk — not a thesis-breaker — and use it to teach the discipline that matters most here: how to actually read a tax footnote, size a contingent liability, and decide whether it changes the rating. It doesn’t. But knowing why is the lesson.
Independent editorial analysis · Not affiliated with or endorsed by The Coca-Cola Company or Berkshire Hathaway Inc.
This case study is independent editorial and educational analysis of publicly available information about The Coca-Cola Company and Berkshire Hathaway Inc. The Baratelli Institute is not affiliated with, endorsed by, sponsored by, or otherwise connected to either company. Coca-Cola®, Berkshire Hathaway®, and related marks are the property of their respective owners. No claim is made to any such marks by the Baratelli Institute. Analysis draws exclusively on publicly disclosed information (SEC filings, 13F/13G filings, press releases, earnings call transcripts, investor materials, journalist reporting); no non-public information has been received from either company. Presented for educational and editorial purposes under principles of fair use and fair comment on publicly traded companies. Nothing in this analysis constitutes investment advice or a recommendation to buy, sell, or hold securities. Consult licensed advisors before investment decisions.
This is an educational case study, not investment advice, not a research report, not a buy/sell rating, not a price target, not an allocation recommendation. Every number traces to a public filing. The Institute is not a registered investment adviser; this is a Lowe v. SEC publisher-exception publication.
Every analytical move in this case study cross-references a Guide chapter. If you want to learn the methodology in full, the Guides are where it’s taught.
“Practitioner case studies — written by an owner, the methodology of the Guides applied to the businesses Berkshire owns, with the workpapers behind it.”