Bill Gates recently reclaimed his number one position as the world’s richest person and extended his lead over Carlos Slim with $72.9 billion in net worth as of May 28, 2013. This lead was driven by several of Bill Gates’ major holdings, including the ones controlled through his investment vehicle Cascade Investment LLC, such as Microsoft Corporation (NASDAQ:MSFT), Ecolab Inc. (NYSE:ECL), and Republic Services, Inc. (NYSE:RSG).
As seen from the chart below, Microsoft Corporaiton (NASDAQ:MSFT) has gained 31.11%, while Ecolab Inc. (NYSE:ECL) and Republic Services, Inc. (NYSE:RSG) have advanced 21.10% and 18.19% this year, respectively. All have been outperforming S&P 500.
Bill Gates’ successful investments
Bill Gates’ Cascade was funded by years of Microsoft Corporation (NASDAQ:MSFT) dividends and share sales. Microsoft Corporation (NASDAQ:MSFT) had been a solid growth stock until 2003 when it started to distribute dividends and became more of a value play. Since 2003, Microsoft Corporation (NASDAQ:MSFT) has been distributing dividends consistently and currently offers an annual dividend yield of 2.63%. Despite the lack of a major breakthrough success in the Internet and social media boom, Microsoft still managed to deliver steady growth and solid cash flow.
Microsoft has had three positive earnings surprises in the last four quarters. Microsoft is making new 52-week highs and continues to provide inexpensive cash flow to its investors at a P/FCF of 14.40. As for product developments, Microsoft has been working with Nokia on the mobile end to roll out Windows phones, and the Nokia Lumia 928 was launched on Verizon Wireless.
The Lumia 925 will be also launched in the coming months globally. By expanding its offerings from more major U.S. carriers, more windows phones are expected to be sold in the U.S. market. Furthermore, by unveiling the Xbox One, which offers voice command and cloud integration and works like a universal entertainment system, Microsoft’s share should gain positive momentum. Although it may be too early for investors to feel comfortable with Microsoft in the mobile and home entertainment market, Microsoft should continue to offer solid cash flow with a solid balance sheet.
Ecolab Inc. (NYSE:ECL) is a leader in water, hygiene, and energy technologies and services. The company provides products and services ranging from cleaning and sanitizing to pest elimination, as well as vehicle wash. With over $12 billion in sales generated in 2012, Ecolab Inc. (NYSE:ECL) is expected to accelerate its growth by merging with Nalco to reach its goal of $20 billion in revenue by 2020.