KO Coca Cola Company

By Monica Langley and Erik Holm 

William Ackman has long looked up to Warren Buffett. It took a massive, money-losing position -- and an obsessive aversion to sugar -- to cause some friction.

The hedge-fund manager took a shot at Mr. Buffett's longtime investment in Coca-Cola Co. on Wednesday, saying the soda company has "caused enormous damage to society."

The broadside came at a New York conference celebrating the Oracle of Omaha's half-century running Berkshire Hathaway Inc. And it reflected growing frustration with repeated criticism from Mr. Buffett's longtime sidekick against one of Mr. Ackman's most prominent investments, Valeant Pharmaceuticals International Inc.

That criticism by Berkshire Vice Chairman Charles Munger against Valeant included comments in an interview with The Wall Street Journal last week: "It's just a company that was too aggressive in ignoring moral considerations in the way it did business."

Valeant has defended its ethics and says it is trying to do a better job of listening to its critics. Its stock, however, has tumbled amid questions about its relationship with specialty pharmacies that distribute its drugs and its growth prospects, producing losses on paper of more than $2 billion for Mr. Ackman's Pershing Square Capital Management LP.

Valeant's shares fell another 5.7% Wednesday to $78.90, leaving them well below the $186 that Pershing Square paid for them on average. The decline means that Mr. Ackman, who makes concentrated bets, is on track to post the hedge fund's worst year since it was founded in 2004.

At the event at the Museum of American Finance on Wednesday, Mr. Ackman was speaking as an investor "inspired by Berkshire Hathaway," and he considers himself a value investor in the Buffett mold. He has studied Mr. Buffett's investment history in great detail, and was even lauded on the cover of Forbes magazine earlier this year as the "Baby Buffett."

They part ways at Coke.

Mr. Buffett famously drinks several Cherry Cokes a day, and the company is one of the largest and longest-held positions in Berkshire's portfolio. Wednesday's event honoring him began serving Coke to attendees before 8 a.m.

Mr. Ackman, meanwhile, is a health and fitness devotee who contends that "sugar is poison." Meals with him are a lesson in abstinence, with bread baskets going untouched and fruit the only acceptable dessert. Nearly every employee who started at Pershing Square with extra weight has lost it.

"Coca-Cola has probably done more to create obesity and diabetes on a global basis than any other company in the world," Mr. Ackman said at the conference.

"I have a problem with Berkshire's ownership of Coke," he said in response to a question about whether he'd found himself on the opposite side of a trade from Berkshire. "Coca-Cola is a company that I wouldn't own."

Coke defended its products, saying it sells more than 200 low- and no-calorie drinks in North America, including bottled water. Soft drink makers like Coke also say it's unfair to single out soda and other sugary drinks for causing obesity and other health problems.

"These comments are irresponsible and do not recognize the current breadth of our business," a Coke spokesman said Wednesday.

Mr. Ackman's absolutism does have its limits. Earlier in the year when Pershing Square weighed whether to take a position in Oreo cookie maker Mondelez International Inc., the firm was satisfied that the company in its view met a couple of key criteria: It presented an opportunity for further cost cutting and could be a potential takeover target.

But Pershing Square's staff worried about Mr. Ackman's hard line on sugar. A colleague brought Mondelez products to the investment committee and waited to see if Mr. Ackman would eat an Oreo. He ate two. That was the go-ahead to start buying.

"Everything in moderation," Mr. Ackman said Wednesday. "It's complicated."

He pointed out that Mondelez products such as cookies and candy bars can be treats after a healthy meal, not outright replacements as Coke products can be for water.

Other comments about Berkshire and its leaders by the hedge-fund manager Wednesday were positive. He argued at points during the event that Mr. Buffett was deserving of admiration and deeply ethical -- not to mention "genetically interesting" given his apparent ability to survive his Cherry Coke habit.

And without mentioning his now-unprofitable Valeant stake by name, Mr. Ackman joked that he'd been learning new investment lessons lately. While Mr. Buffett often tells investors to "be fearful when others are greedy and to be greedy only when others are fearful," Mr. Ackman says he's lately learned to "be fearful when others are fearful."

Anupreeta Das contributed to this article.

Write to Monica Langley at monica.langley@wsj.com and Erik Holm at erik.holm@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

November 11, 2015 19:53 ET (00:53 GMT)

Coca Cola (NYSE:KO)
Historical Stock Chart
From Mar 2024 to Apr 2024

Coca Cola (NYSE:KO)
Historical Stock Chart
From Apr 2023 to Apr 2024