In this article, we take a look at Bill Gates’ top 5 stock picks. If you want to check out our detailed analysis of Bill & Melinda Gates Foundation Trust, go to Bill Gates’ Latest Stock Portfolio: Top 10 Stock Picks.
5. Ecolab Inc. (NYSE:ECL)
Bill & Melinda Gates Foundation Trust’s Stake Value: $771 million
Percentage of Bill & Melinda Gates Foundation Trust’s Portfolio: 3.9%
Number of Hedge Fund Holders: 47
Ecolab Inc. (NYSE:ECL) offers services as well as technology solutions for water treatment, infection prevention and hygiene. As of the first quarter of 2022, 47 hedge funds hold shares in the company with Bill & Melinda Gates Foundation Trust being the lead stakeholder.
Cantillon Capital Management comes in second with a stake of $318 million. The total equity held by 47 hedge funds in the company amounts to $2.4 billion.
Ecolab Inc. (NYSE:ECL) has an annual dividend yield of 1.38% as of the first quarter of 2022. Ecolab declared a quarterly dividend on May 5. The shareholders of record on June 21 will be paid a dividend of $0.51 per share on July 15. The company has been increasing its dividend payouts consecutively for 30 years.
On June 8, Deutsche Bank analyst David Begleiter lowered his price target on Ecolab Inc. (NYSE:ECL) to $195 from $200 and kept a Buy rating on the stock after the company preannounced that Q2, 2022 earnings would fall 8% below consensus. Bagleiter pointed to the higher-than-expected raw material costs as the driving factor of the shortfall in his research note to investors.
Here’s what Baron Funds had to say about Ecolab in their Q1, 2022 investor letter:
“Lastly, we added to our position in the leading water, hygiene and infection prevention company, Ecolab Inc. (NYSE:ECL), as the stock sold off on concerns over rising raw material costs. We believe the sell-off is overdone as Ecolab’s strong competitive positioning and proven pricing power would enable it to offset the rising costs (though with a lag). We think that the company will continue benefiting from the secular growth trends towards sustainability, while still having a long runway for growth with only an 8% share of its estimated $147 billion addressable market.”
4. Caterpillar Inc. (NYSE:CAT)
Bill & Melinda Gates Foundation Trust’s Stake Value: $1.6 billion
Percentage of Bill & Melinda Gates Foundation Trust’s Portfolio: 8%
Number of Hedge Fund Holders: 54
Caterpillar Inc. (NYSE:CAT) is the world’s largest manufacturer of construction and mining equipment. Apart from heavy machinery, it also provides financial and insurance products around the world. The Fortune 100 company is based in Illinois.
On May 20, Tigress Financial analyst Ivan Feinseth raised his price target on Caterpillar to $282, up from $278 and kept a Buy rating on the shares. The analyst observed in his research note to investors that Caterpillar Inc. (CAT), which just announced a new $15 billion share buyback plan at its analyst day, continues to experience strong end-market demand and is well-positioned to benefit from ongoing capital equipment spending.
On June 8, Caterpillar’s board decided to raise the quarterly cash dividend by 8%, to $1.20 per share of common stock, payable August 19, 2022, to stock owners of record at the close of business on July 20, 2022. Caterpillar Inc. (NYSE:CAT) has an impressive track record of growing its dividend payouts consecutively for 29 years. It currently maintains a dividend payout ratio of a sustainable 37%.
In their Q2, 2021 investor letter, Oakmark Funds had the following to say about Caterpillar Inc. (NYSE:CAT):
“Having followed the company closely for north of a decade, Caterpillar Inc. (NYSE:CAT) is a name we know well. For much of its history, the operating efficiency of the company left much to be desired, but its underlying competitive position was rarely in doubt. A series of actions over the past decade (e.g., LEAN implementation, improved service mix, optimized manufacturing footprint) helped to narrow the gap between Caterpillar’s potential and its realized results, driving material margin expansion and strong share price performance. In our view, the company remains among the highest quality industrials in the market, but its underlying business is cyclical, which can translate to large swings in both performance and investor sentiment over short time periods. Our ability to focus on the long-term, sustainable earnings power of a business (rather than getting distracted by near-term fluctuations) is our most significant edge when investing in cyclical businesses. Due to the inherent volatility in Caterpillar’s end markets and operating performance, we suspect we’ll have a future opportunity to own this high-quality business at a more attractive price once the cycle turns and today’s enthusiasm wears off.”
3. Canadian National Railway Company (NYSE:CNI)
Bill & Melinda Gates Foundation Trust’s Stake Value: $1.7 billion
Percentage of Bill & Melinda Gates Foundation Trust’s Portfolio: 8.8%
Number of Hedge Fund Holders: 38
Canadian National Railway Company (NYSE:CNI) is a Class I freight railway based in Quebec, Canada. It is the largest railway in Canada in terms of the rail network’s physical size as well as revenue.
As of the first quarter of 2022, TCI Fund Management is the biggest shareholder in the railway company with an equity ownership worth almost $5 billion. Bill & Melinda Gates Foundation Trust follows the lead at the number two spot. For comparison, the total money invested by 38 hedge funds in the Canadian National Railway Company is $8 billion.
On June 14, Deutsche Bank analyst Amit Mehrotra placed a “Catalyst Call: Buy” on Canadian National Railway Company as a short-term investment idea. With regard to the upcoming Q2, 2022 reporting season, the analyst is most bullish on the setup for rails.
His updated calibration of rail volumes points to a 7.3% average volume growth YoY in the second part of 2022, even assuming no growth off-second quarter levels.
The combination of higher volume, peaking energy prices and improving service is good for prospective profitability, and certain rails could exit 2022 at record levels, Mehrotra told investors in a research note. In this respect, the analyst is most optimistic on the Canadian rails.
2. Waste Management, Inc. (NYSE:WM)
Bill & Melinda Gates Foundation Trust’s Stake Value: $2.9 billion
Percentage of Bill & Melinda Gates Foundation Trust’s Portfolio: 14.9%
Number of Hedge Fund Holders: 40
Waste Management, Inc. (NYSE:WM), as the name implies, is a waste management and environmental services company based in Texas. Bill & Melinda Gates Foundation Trust is the leading shareholder in the company with a stake value of almost $3 billion.
On May 13, As previously reported, BofA analyst Michael Feniger upgraded Waste Management, Inc. (NYSE:WM) to Neutral from Underperform and set a price target of $165, up from $155, after the corporation reported a better than anticipated start to the year in terms of managing the cost environment and driving price.
In its Q1 results, Waste Management, Inc. (NYSE:WM) exceeded earnings expectations with an EPS of $1.29, $0.15 above consensus. The revenue was also above estimates by $208 million, at $4.6 billion.
Waste Management, Inc. (NYSE:WM) has an annual dividend yield of 1.85% as of June 17. The company has been increasing its dividend payout for 20 consecutive years. Waste Management declared a quarterly dividend on May 9. The investors of record on June 3 will be paid a dividend cash amount of $0.65 per share on June 17.
1. Berkshire Hathaway Inc. (NYSE:BRK-B)
Bill & Melinda Gates Foundation Trust’s Stake Value: $10 billion
Percentage of Bill & Melinda Gates Foundation Trust’s Portfolio: 51%
Number of Hedge Fund Holders: 104
The number one on the list of Bill Gates’ top stock picks from his latest portfolio is of course, Berkshire Hathaway Inc. (NYSE:BRK-B). It is a multinational $593-billion-worth conglomerate based in Nebraska. The company has several wholly owned subsidiaries like GEICO and Duracell as well as minority holdings in companies like Apple, American Express and Bank of America.
Berkshire Hathaway is the top stock in Bill Gates’ portfolio and as of 2022, Gates Foundation is an owner of $10 billion worth of equity in the company, making the fund the leading shareholder in Berkshire Hathaway while the total number of hedge funds holding stake in company’s Class-B shares amounts to $19 billion. Berkshire Hathaway Class-B shares are also part of Wells Fargo’s recession portfolio as reported on June 14.
On April 30, Warren Buffett used the annual meeting of Berkshire Hathaway Inc (BRK.A, BRK.B) to announce major new investments including a bigger chunk of equity in Activision Blizzard (ATVI), while also railing against Wall Street excess and addressing the risks of inflation and nuclear war to the conglomerate, Reuters’ Carolina Mandl and Jonathan Stempel report. Buffett said Berkshire Hathaway, long faulted for holding too much in cash, boosted its combined holdings in oil company Chevron (CVX) and “Call of Duty” game maker Activision Blizzard nearly six-fold to over $31 billion.
You can also take a peek at 10 Best Tech Stocks to Buy for Long Term and 10 Best Falling Stocks to Buy Right Now
