In this article, we discuss Bill Gates’ 2022 portfolio and 7 stocks to sell.
Bill Gates is perhaps the most well-known billionaire in modern times. He amassed his first billion dollars at the age of 31 with his exploits as the founder and chairman of Microsoft Corporation (NASDAQ:MSFT). The nearly $2 trillion empire he helped set up is one of the world’s leading technology conglomerates today, and has allowed the Seattle-born 66-year old to dabble in various philanthropic and investment ventures.
Bill and Melinda Gates Foundation Trust is managed by Chief Investment Officer Michael Larson, who is also responsible for managing Bill Gates’ personal wealth. As of the first quarter of 2022, Bill and Melinda Gates Foundation Trust has $19.76 billion in assets under management, with a top 10 holdings concentration of 95.92%. The fund’s portfolio consists of 18 stocks in total, most of which are the fund’s long-term holdings. In the first quarter of 2022, the fund did not make any new purchases or increased stakes in any stocks, but reduced holdings in 8 equities, and completely sold out of 4 stocks. The most prominent stocks in Gates’ portfolio include Berkshire Hathaway Inc. (NYSE:BRK-B), Microsoft Corporation (NASDAQ:MSFT) and Walmart Inc. (NYSE:WMT), along with others mentioned below.
Now let’s take a look at the top 7 stocks to sell according to the portfolio of Bill Gates.
Our Methodology
We examined Bill Gates’ portfolio for the first quarter of 2022, and picked the top 7 stocks in which his fund recently reduced/exited his position.
Bill Gates’ 2022 Portfolio: 7 Stocks to Sell
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 63
Reduction In Stake: 57%
Walmart Inc. shares represent 2.27% of Bill Gates’ portfolio for the first quarter of 2022, with 3.02 million shares valued at roughly $450 million. It boasts a market cap of $361 billion, and operates a range of retail and wholesale supermarkets across the United States, Canada and Mexico. Walmart Inc. offers a solid dividend yield of 1.83% as of May 18.
Guggenheim analyst Robert Drbul on May 18 kept a ‘Buy’ rating on Walmart Inc. shares, and decreased the price target to $175 from $185. The analyst reduced his FY22 and FY23 estimates owing to logistical headwinds and elevated costs on the back of rising inflation. Nonetheless, he remains bullish on the firm’s long-term outlook, given its price leadership, scale, and a more diversified profit base as compared to peers.
Out of all the hedge funds tracked by Insider Monkey, 63 reported bullish bets on Walmart Inc. shares at the close of Q4 2021, with a combined value of $7.13 billion. This shows a downward trend from the previous quarter where 71 hedge funds held positions in the company. According to its first quarter portfolio, GQG Partners was the largest shareholder of Walmart Inc., with 15.43 million shares valued at $2.29 billion.
The firm released its first quarter earnings report on May 17, and EPS was recorded at $1.30, below estimates by $0.18. Quarterly revenue was recorded at $140.3 billion, above analysts’ forecasts by $2.24 billion. As of May 18, shares of Walmart Inc. have lost 13.50% in the last 12 months, and 14.26% over the last 6 months.
In addition to Berkshire Hathaway Inc. and Microsoft Corporation, Walmart Inc. is on the radar of investors on Wall Street.
6. FedEx Corporation (NYSE:FDX)
Number of Hedge Fund Holders: 64
Reduction In Stake: 65%
FedEx Corporation (NYSE:FDX) offers e-commerce delivery and logistics services to clients in the United States and internationally. According to regulatory filings for Q1 2022, Bill Gates owned 534,000 shares of the firm at a price of $123.6 million, representing 0.62% of its total portfolio. This represented a decline of 65% in holding over the previous quarter, where 1.49 million shares of FedEx Corporation were reported in the billionaire’s portfolio.
On May 9, Citi analyst Christian Wetherbee maintained a ‘Buy’ rating on FedEx Corporation shares, and set a price target of $270, noting the firm could become the ‘universal shopping cart’ in e-commerce, with its 2020 acquisition of ShopRunner and partnership with Microsoft allowing it to expand operations in the e-commerce market. The analyst has a long-term bullish stance on the shares.
As of the end of the fourth quarter of 2021, FedEx Corporation shares were reported in the portfolios of 64 hedge funds out of 900+ in the database of Insider Monkey. The aggregate value of these holdings stood at $2.46 billion. This shows a positive trend from the quarter before, where 49 hedge funds were long on the company shares. Southeastern Asset Management held a $321 million stake in FedEx Corporation at the close of the first quarter of 2022, making it the firm’s largest shareholder.
Investment firm Artisan Partners, in its Q3 2021 investor letter, talked about FedEx Corporation. Here’s what the fund said:
“Our weakest Q3 performers included FedEx. Shares of FedEx, a global shipping and logistics firm, were held back by disappointing business results as labor cost headwinds and air network disruptions overshadowed solid top-line trends. We think the company should be able to overcome these near-term issues. Importantly, FedEx has strong pricing power as it operates in a consolidated global shipping industry. In September, the company announced it would increase its shipping rates by an average of 5.9% across most of its services, which is the first time in several years that its annual increase would exceed 5.0%. The industry’s renewed pricing discipline is a welcome change, reflecting a broader commitment to earn better returns on invested capital. FedEx is also closer to fully integrating TNT, a European-focused parcel company it acquired in 2016. The market is beginning to incorporate a higher probability FedEx will fully integrate TNT, which will provide a significant boost to profits. The stock now trades at a near-trough multiple of less than 12X 2022 earnings, so we added to our position on weakness.”
5. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 55
Reduction In Stake: 68%
Bill Gates owned roughly 741,000 shares of United Parcel Service, Inc. (NYSE:UPS) in the first quarter of 2022, with a price tag of $158.8 million. This was a decrease of 68% in holding over the previous quarter where the billionaire owned 2.28 million shares of the firm.
United Parcel Service, Inc. is an Atlanta-based firm which provides logistics and package delivery services in the United States and across the globe. On April 27, Credit Suisse analyst Ariel Rosa gave the firm an ‘Outperform’ rating, and lowered the price target to $226 from $263. She believes that risks have increased moderately for the firm’s business, which includes competition hurting the pricing power, decreasing demand due to slowdown in the macro setting, and labor challenges adversely affecting margins.
In the first quarter, United Parcel Service, Inc. posted revenue of $24.4 billion, beating estimates by $579.2 million. EPS was recorded at $3.05, above expectations by $0.17.
Hedge funds were seen buying into United Parcel Service, Inc. stock. At the end of December, 55 hedge funds were long on the company shares with aggregate holdings worth $2.1 billion. In comparison, 42 hedge funds held positions in the company at the end of September.
In addition to Berkshire Hathaway Inc., Microsoft Corporation and Walmart Inc., United Parcel Service, Inc. is a prominent stock in the portfolio of Bill Gates.
4. Crown Castle International Corp. (NYSE:CCI)
Number of Hedge Fund Holders: 38
Reduction In Stake: 69%
Crown Castle International Corp. (NYSE:CCI) is a real estate investment trust (REIT) which operates and leases wireless communication infrastructure such as cell towers and fiber cables across the United States. According to his 13F portfolio for the first quarter, Gates’ owned 1.42 million shares of the firm at a value of $262.1 million. This is down from 4.56 million shares a quarter ago.
On April 22, analyst Ric Prentiss of research firm Raymond James maintained an ‘Outperform’ rating on Crown Castle International Corp. shares, and raised the price target to $206 from $184. He sees US carriers becoming more active on cell towers through 2022 and 2023, and sees strong growth in tower infrastructure for the next several years.
Billionaire Ken Fisher increased his stake in Crown Castle International Corp. by 6% in the first quarter of 2022, making his fund Fisher Asset Management the firm’s largest shareholder with a $509 million stake.
In its Q1 2022 investor letter, investment firm ClearBridge Investments talked about Crown Castle International Corp.. Here is what the fund said:
“U.S. communications company Crown Castle International (NYSE:CCI) was the largest detractor from quarterly performance. Crown Castle is the leading independent owner and operator of wireless communications infrastructure in the U.S. with a portfolio of approximately 40,000 towers. The stock underperformed as, driven by rising interest rates, investors rotated away from defensive into more value-oriented sectors. Communications infrastructure remains attractive, however, as companies continue to deploy greater capital spend to support the strong tailwinds from 5G.”
3. Canadian Pacific Railway Limited (NYSE:CP)
Number of Hedge Fund Holders: 55
Reduction In Stake: 100%
Canadian Pacific Railway Limited (NYSE:CP) is a railway company headquartered in Calgary, and operates a transcontinental freight railway network roughly 13,000 miles long. Bill Gates’ hedge fund sold off all the firm’s shares at the end of Q1 2022.
But major hedge funds were bullish on Canadian Pacific Railway Limited shares at the close of the fourth quarter of 2021, where 55 reported bullish bets on the company shares, as compared to 38 hedge funds a quarter earlier.
Raymond James analyst Steve Hansen on April 22 reiterated a ‘Market Perform’ rating on Canadian Pacific Railway Limited shares, and decreased the price target to C$100 from C$105. The analyst lowered the price target on the back of concerns over the slowing economic backdrop, and a weaker-than-expected start to the year. Hansen notes the firm’s Q1 performance suffered on account of stiff weather, volume and cost-related headwinds.
Canadian Pacific Railway Limited posted an EPS of $0.52 for the first quarter, which missed estimates by $0.04. Revenue of $1.43 billion for the quarter also underperformed consensus figures by $40.1 million.
Here is what ClearBridge Investments had to say about Canadian Pacific Railway Limited in its Q3 2021 investor letter:
“The other major headwind to relative performance in the quarter was Canadian Pacific Railway. The stock has been a strong performer for the Strategy but negative sentiment around its bidding war for U.S. rail operator Kansas City Southern has weighed on the stock since late May. As a result, the cyclical uptick we expected from the company has been masked by the takeover. Indeed, we have been frustrated by the muted performance among Canadian Pacific and other recently added positions in our structural bucket of growth companies with more cyclical business models or that are undergoing a restructuring that should lead to a step change improvement in earnings. As more regions reopen from COVID-19 and spending rebounds, we expect better performance from our structural names, including Airbus and hospitality and food service provider Compass.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 158
Reduction In Stake: 100%
Alphabet Inc. (NASDAQ:GOOG) stock was completely sold off from the portfolio of Bill Gates in the first quarter of 2022. The tech giant was reported in the portfolio of 158 hedge funds according to Insider Monkey’s Q4 2021 database. This shows a positive trend from the previous quarter where the number of bullish hedge funds bets on the firm stood at 156.
On April 27, Jefferies analyst Brent Thill lowered the firm’s price target on Alphabet Inc. to $3,400 from $3,600 and reiterated a ‘Buy’ rating on the company shares. The analyst noted that the firm’s Search and Cloud business saw healthy growth, but YouTube advertising revenue missed consensus estimates for three consecutive quarters with headwinds looking set to continue into the next quarter. He lowered his 2022 estimates for gross and net revenue, operating margin and EPS after the company announced its Q1 results.
For Q1 2022, Alphabet Inc. posted EPS of $24.62, falling below consensus estimates by $0.93. Revenue of $68 billion for the quarter recorded a jump of 22.95% year-on-year, and also outperformed estimates by $124.6 million.
Investment firm Baron Funds talked about Alphabet Inc. in its Q1 2022 investor letter, stating:
“We have modestly reduced the size of our position in Alphabet Inc. (from 6.5% at the end of the fourth quarter of 2021 to 5.3% as of the end of the first quarter of 2022), after the stock rallied 64% in 2021 and continued outperforming during the first quarter, declining just 3%.”
1. Grupo Televisa, S.A.B. (NYSE:TV)
Number of Hedge Fund Holders: 17
Reduction In Stake: 100%
Bill Gates completely sold off his stake in Grupo Televisa, S.A.B. (NYSE:TV) during Q1 2022. The Mexican firm provides TV, cable and content subscription services in the Spanish language around the world.
On March 18, JPMorgan analyst Marcelo Santos upgraded Grupo Televisa, S.A.B. to ‘Overweight’ from ‘Neutral’, with a price target of $15.50, up from $9. Santos sees the firm well-positioned to capture market share in an industry worth $13 billion per annum, and cites its leadership in Spanish-language content along with a solid portfolio of news and sports.
At the close of Q4 2021, 17 hedge funds held positions worth $669 million in Grupo Televisa, S.A.B.. This is up from 16 hedge funds in the preceding quarter with $843 million worth of stakes in the company. The most prominent shareholder of Grupo Televisa, S.A.B. was Chicago-based Harris Associates, which held a $710.8 million stake in the firm at the close of Q1 2022.
Oakmark Funds, an investment firm, mentioned several stocks in its Q2 2021 investor letter, and Grupo Televisa, S.A.B. was one of them. Here is what the fund said:
“Grupo Televisa, a media company headquartered in Mexico and the world’s largest producer of Spanish-language content, was a top contributor for the second quarter. Grupo Televisa’s share price jumped when the company revealed that it would merge its content and media assets with Univision. In a call with shareholders, CEO of Televisa, Alfonso de Angoitia, and CEO of Univision, Wade Davis, provided details on the $4.8 billion agreement, which combines these leading media businesses in the two largest Spanish-speaking markets in the world. Overall, we think the deal makes strategic sense as streaming is the future in television, and the new company will very likely become the dominant Spanish-language streaming service. There will also be synergies from combining the two businesses, which should improve profitability versus when they were stand-alone businesses. In addition, over the long term, we believe consolidation in the media sector will continue, providing an opportunity for the new entity to partner with a larger company. Aside from the strategic merits, we believe Televisa received an attractive valuation for its content business as the $4.8B value was higher than our internal estimates. We commend management for this transaction.”
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