Updated Nov 30th 2013 10:02AM
Warren Buffett's investments in Coca-Cola , Procter & Gamble , and Wal-Mart Stores are significant not only because of the Oracle of Omaha's outstanding track record but also because of his extreme portfolio concentration.
Although Buffett's holding company, Berkshire Hathaway, owns 43 stocks in its portfolio, most of its positions are tiny and inconsequential. The largest nine positions account for 81% of the portfolio -- and Coca-Cola, Procter & Gamble, and Wal-Mart are three of those nine. As three of Buffett's top nine investments, each is an important stock for coattail investors to scrutinize.
Nowadays, everyone "knows" Coca-Cola has a defensible competitive position in the soft-drink market, but the picture was not so clear when Buffett bought his original stake in 1988. Back then, many investors were alarmed by Coca-Cola's declining earnings and feared that the company would lose market share in the years ahead. Of course, the iconic beverage company regained its composure and continues to dominate the industry to this day.