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Investment fizzles – Coke stocks drop

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Morehouse is one of the few Atlanta-area universities that hasn’t been hurt by Coca-cola’s falling stock price, the Wall Street Journal reported on June 14.

Morehouse College got an 11.7 percent return on its investments last year, while other area schools struggled. Emory University saw its endowment shrink 12.3 percent, while Agnes Scott College saw its investments fall 17 percent.

The difference? Morehead’s stock holdings include only a tiny fraction of Coca-cola stock, while the other two schools have around half of their endowments invested in the soft drink giant. In the last two years, Coca-cola stock has lost more than a third of its value.

Coke, a historically strong performer, has been a natural investment for Atlanta schools. Many schools have received shares as charitable contributions. Why did Morehouse stay away?

Chief Financial Officer James Fletcher told the Journal he believes it is unwise to bet too much of the school’s small $106 million endowment on any one stock. Instead, he keeps roughly 75 percent of the school’s money in a variety of stocks and 25 percent in fixed-income securities.

The strategy has paid off. Moody’s Investor Services has given its generally favorable A1 rating to Morehouse’s upcoming $14 million bond offering. The money will be used to build a new building, parking facility and other improvements.

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