Billionaire Bill Gates’ Big Moves: The Coca-Cola Company (KO), The Procter & Gamble Company (PG), Comcast Corporation (CMCSA)

Page 1 of 2

The Coca-Cola Company (KO)What has billionaire and co-founder of Microsoft Bill Gates been buying lately? He, along with is his wife Melinda Gates, run a foundation called The Gates Foundation, which is centered around charitable works. The foundation controls some $37 billion, and is overseen by Michael Larson. Larson is the Chief Investment Officer for Cascade Investment (see its stock purchases here), which is the the investment vehicle for The Gates Foundation, and manages the Gates’ personal fortune. The foundation, much like fellow billionaire Warren Buffett, likes to focus on high quality, large-cap stocks, and so it is the perfect place to look to find top notch stock picks. Let’s see what the foundation was investing in during the fourth quarter of 2012.

Gates Foundation is cutting its stake in…

The first move that caught my eye was Gates’ sell-off of his entire Costco Wholesale Corporation (NASDAQ:COST) stake during the fourth quarter. Costco, the retail giant, previously made up 3.5% of Gates’ portfolio during the third quarter. The company is facing competition from the likes of BJ’s Wholesale and Wal-Mart’s Sam’s Club. The competition and business model make the industry one of  “tight” margins. Costco has an operating margin of 2.8% and return on sales of 1.8%, and so the slightest bit of increased pressure hurts the business’ earnings potential. The PEG for Costco is now up to 1.9, and when stacked up against competitors the stock is a bit expensive. Costco trades at 16x cash flow, versus competitors Target (8x), Wal-Mart (9.5x) and Sears (13.5x).
Comcast Corporation (NASDAQ:CMCSA) was another big sell-off, with Gates’ dumping all 1 million shares the foundation owned. The media company’s debt is a big reason for concern, with a long-term debt to equity ratio of 77%. Comcast managed to lose some 7,000 residential video subscribers last quarter, in part due to pressures from competition at the hands of telecom service providers. These include Verizon and AT&T, as Verizon added 144,000 video subscribers and AT&T added 192,000. Comcast Corporation (NASDAQ:CMCSA) also appears to have gotten a head of itself with respect to valuation, trading at 1.7x sales, whereas major peer DirecTV is at 1.0x and Dish Network at 1.1x.
New addition to the Gates Foundation…
Notable new addition to Gates’ portfolio includes Siemens AG (ADR) (NYSE:SI), which is now Gates’ 23rd largest publicly owned security. Siemens pays a solid dividend yield of 3.8% on only a 52% payout ratio. What’s more is the stock trades at a 0.4 PEG ratio, cheap by any standard. This is in part due to the fact that investors are not fully appreciating the company’s 5-year expected EPS growth rate of 35%.

Siemens is a leader in many of its segments, which includes industrial automation, power generation and medical equipment. The above-mentioned expected growth should in part be driven by an increased spending in emerging markets, as these countries look to build up their infrastructure. Healthcare is one of the rapidly growing segments for Siemens, which makes up 17% of revenues, and includes products such as hearing instruments, diagnostic imaging systems, and therapy equipment.

Siemens also has a 50-50 joint venture with Nokia to merge its Middle East and Africa businesses together. This will help the two, together, provide increased quality services. A couple of other billionaire investors are also encouraged by Siemens; Ken Fisher of Fisher Asset Management and Jim Simons of Renaissance Technologies are two of the company’s top owners (check out Simons’ newest picks).

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!