Hedge fund manager Bill Ackman is taking on the two largest carbonated beverage companies in the world with a series of tweets aimed at Coca-Cola Inc KO and PepsiCo PEP.
If Ackman takes a short position or pushing for legal challenges, he could now find himself up against one of the greatest investors of all-time and a member of Congress.
What Happened: Ackman lashed out at Coca-Cola and Pepsi on Twitter, citing the health impact that they have on consumers around the world.
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“Coca-Cola and PepsiCo have caused more harm to global health than likely any other company. Just look at the correlation between diabetes/obesity and soft drink consumption,” Ackman tweeted.
It’s “remarkable” that a massive judgement from lawsuits against them hasn’t been won yet, Ackman said.
“My issues with KO/PEP are more with their advertising, health disclosures (not), and the buying off of critics. The harm is born by less health-aware consumers who are disproportionately kids or from low income groups.”
"When was the last time your saw an obese person in a Coke ad?” Ackman asked.
Ackman also acknowledged in the thread that he holds no long or short position in any soft drink company.
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Why It’s Important: On Jan. 5, Congressman Lloyd Doggett (R-TX) disclosed he bought shares of Coca-Cola valued at $1,000 to $15,000.
While it’s a small position, it’s worth noting that Doggett was one of the most successful members of Congress when it came to buying and selling stocks in 2022. Doggett ranked seventh in 2022 according to a report from UnusualWhales and posted a gain of 8.9% on the year.
Doggett was one of several members of Congress who beat the SPDR S&P 500 ETF Trust SPY, which posted its worst yearly performance since 2008.
“Bad news @BillAckman, this Congressman just reported owning Coke $KO. Good luck with your campaign while our lawmakers have conflicts of interest,” CongressTrading tweeted.
Members of Congress have drawn scrutiny for trades made while in office, with potential conflicts of interest ranging from insider information to serving on committees that make decisions.
Oklahoma Rep. Kevin Hern, who was nominated this week to be speaker of the House, candidate and one of several Congress members who made questionable trades. Hern sits on several committees related to energy prices and energy independence and bought oil pipeline stocks last year.
Members of Congress also bought energy stocks and defense stocks prior to the invasion of Ukraine by Russia. Items like these have led to a push from lawmakers like Sen. Elizabeth Warren and Sen. Steve Daines to ban members of Congress and their spouses from owning or trading individual stocks.
Investors may also be aware that Coca-Cola is one of the largest holdings of legendary investor Warren Buffett through his Berkshire Hathaway Inc BRKABRKB.
Berkshire owns 400 million shares of Coca-Cola and around 9.2% of the company. The stake in Coca-Cola is one of the oldest of Buffett’s company and represents around 8% of his stock investing portfolio.
If Ackman takes a short position against Coca-Cola or supports a legal war, he could find himself up against Buffett and a leading Congressman.
Ackman also found himself called out for hypocrisy of comments on the beverage companies on Twitter, as reported previously by Benzinga.
Users on Twitter highlighted the restaurant stocks like Chipotle Mexican Grill CMG and Restaurant Brands International QSR that Ackman has as some of his top holdings. These restaurants sell products from the two companies that Ackman targeted.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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