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Yes, I'm Bill Ackman from New York. Is there a price at which it is inappropriate for a company to use its capital to buy back shares? Okay, tell me again . Uh, Coca-Cola for 40 percent of the shares, is this a smart place for Coca-Cola to put capital? Well, that sounds like a very high price when you're talking about a share buyback for, uh, that amount, per share.
But I would say this: uh, Coca-Cola has been around for about 100- odd years now, 12 years, and, uh, in those 112 years, there have been very few instances, if any, where Coca-Cola hasn't been smart about buying back its shares. Coca-Cola is probably, in my opinion, among the companies that I can understand, the best big business in the world.
I mean, it's a fantastic business, and, uh, we love it when Coca-Cola buys back stock and our interest goes up. In 1988, when we purchased the shares, we owned 6.3 % of Coca-Cola shares. We actually increased that share a little bit over the years. But if they hadn't bought back the shares, we would probably own about 6.7% or 6.8% of Coca-Cola right now.
We currently own a little over 8%. Uh, thanks to the ransom. Uh, about a billion 8- ounce servings of Coca-Cola or Coca-Cola products will be sold in the world today. Uh , 8% of them is 80 million, and 6.8% is 68 million. So, another 12 million servings are sold worldwide thanks to Berkshire Hathaway.
And they make a little more than a penny per serving, so, you know, that makes me a little happy. Yes. And I-I think that... All I can tell you is that I approve of the Coca-Cola buyback. I would much rather they were buying back shares at 15 times earnings, but, uh, when I look at other uses of capital, I still think it's a very...
very good use of capital. And maybe the day will come when they can buy it at a price that is 20 times the profit. And if they can, I hope they borrow a lot of money to buy a bunch of it at those prices. And, uh, I think we'll be in a better position in 20 years if Coca-Cola follows a consistent approach to buybacks, uh.
I don't think this applies to many companies. I mean, buyouts have become trendy and are done for many silly reasons. And, uh, that's why I-I-I don't think that buying back shares by everyone is well- founded. Uh, you know, we see companies issuing tons of options and then buying back shares at a much higher price.
I, you know, I started reading about investing when I was six, and I think the first thing I read was: buy low, sell high. But these companies, because of their options, you know, they sell low and then buy high, and they have a different formula than the one I was taught. So there are a few that we don't approve of.
But when we have shares in a great business, we like the idea of a buyout even at prices that could lead to serious problems. This usually turns out to be a pretty good policy. Charlie? Well, I think the answer is that in any company, the stock can reach such a high price that it would be unwise for the corporation to buy back its shares.
Of course. And you may even fall into gross abuse. Uh, before the crash, utilities were frantically buying up their own shares to increase their value. In the end, it was like a giant financial pyramid. So, all sorts of excesses are possible, but truly great companies that buy shares at a high price take profits exactly where it might be wise to do so.
Our stake in GEICO went from 33% to 50% without a penny on our part because GEICO was buying back its shares, and, uh, we benefited substantially , but we benefited much more when prices were lower. I mean, we would... Our stake in the Washington Post has gone from nine and a half percent to 17 and a half percent over the years without us buying a single share.
But the Post, Coca-Cola, or any other company doesn't get as good a buyout deal now as they used to. We still think this is probably the best use of money in many cases.
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