Abel Sees Value in Berkshire's 'Forever' Stocks

The new CEO of Berkshire Hathaway, Greg Abel, has reassured shareholders that he's not looking to shake things up in the company's portfolio. In fact, he's already shown a commitment to Warren Buffett's legacy by keeping three stocks that his predecessor had deemed 'forever' investments: Coca-Cola (KO), American Express, and Apple.

Coca-Cola has been a long-time favorite of Buffett's, with Berkshire Hathaway buying stock in the company for the first time in 1988. In fact, it was mentioned in Buffett's 1988 shareholders' letter that his 'favorite holding period is forever.' The reason behind this investment strategy is that Coca-Cola provides a steady stream of dividends, which are an important source of passive income for individual investors and Berkshire Hathaway alike.

Under Abel's leadership, the company has continued to hold onto Coca-Cola stock. In fact, it recently sold off 16 of its smallest positions in the first quarter, but kept the big three. And it seems that this decision was a good one, as Coca-Cola has already demonstrated its worth by soaring 11% after its second-quarter earnings release on July 28.

Coca-Cola's performance can be attributed to its strong marketing campaign during the World Cup, which saw Powerade drinks rise 8% in volume while trademark Coca-Cola volume rose 5%. The company has also been releasing new products, packaging, and sizes to make its drinks accessible to all kinds of consumers.