08-01-2018, 12:34 PM
(07-31-2018, 03:51 PM)Forticus Wrote: Kerim,,
or some other MO specialist ...
I read that MO owns 10% of BUD.
By Mcap and sales, BUD ist about twice as large as MO.
Does that mean that 20% of MO effectively are BUD?
If so, I would hold more BUD through my MO shares than by my direct BUD shares.
That would be more BUD in my portfolio, than I had intended.
Interesting question, and definitely always worth looking at your portfolio it totality to see how it all fits together.
Personally, I wouldn't look at it in terms of market cap. Or at least it isn't nearly so direct as saying that a certain percentage of your MO shares can effectively be thought of as BUD (InBev) shares. MO owning 10.2 percent of the outstanding shares of InBEv isn't really any different from BRK owning a lot of KO. It represents a significant asset on MO's books, and about $532 million in dividends to MO from InBev in 2017. That accounts for a little more than 5 percent of MO's $10 billion in earnings in 2017. If the share price of InBev goes up or down, that will of course affect MO's value, but so long as InBev is paying the dividends, there is no effect on MO's earnings. If InBev completely eliminated the dividend, it would be a hit to MO's earnings, but not catastrophic. If InBev went bankrupt (!!!), it would be pretty rough on MO.
In other words, if you own a lot of MO and only a little BUD, I guess it would be fair to say that you are more exposed to BUD through MO than through direct ownership. But the risks of your exposure to BUD through MO are much more attenuated and difficult to quantify.