Annus horribilis, page-44

Yes, there are definitely some cultural differences to consider however when you compare the price charts there is a specific point where CCL falls away and KO keeps rising. I'm not sure that cultural differences can fully explain it. I'm also not sure that adjusting returns for each stock based on their respective beta coefficient would fully explain it either. The sales and performance figures of CCL have definitely had a large impact, but the point I am trying to make is that I don't believe it the model is dead and the product is permanently out of favour. KO is clearly a better managed business that is taking advantage of the market it operates in. Also keep in mind that talk in the US is that KO could actually be doing better...to me this suggests that with better management, CCL can also do much better.

The debt aspect is interesting. I was alarmed to see how much debt CCL has. Normally I try to avoid companies with too much debt however thinking about this some more, given that rates are historically low, this isn't as bad as it may seem. One main reason that a company may hold debt is to help reduce tax payable. If the interest rates on the debt you hold are falling, then it makes sense that you need to carry more debt to get the same effective tax reduction. For an established company, I can see that this makes some sense. It is easier to add additional debt and use this to reduce tax payable, than to grow the business by 15-20% per year. I don't agree that it's the right move, but it's easy and maybe this is the thinking that they have used in the past.