In this article, we discuss the 10 stocks to buy and hold for over 5 years according to Bill Gates.
Bill Gates stepped down from his role on the board of Microsoft, one of the largest tech companies in the world, in May 2020. Gates stepped down from the chief executive position at the tech giant in 2000 and left another full-time role with the company in 2008. Gates left these positions to give more time to his philanthropic activities. Gates has a personal net worth of more than $134 billion. The latest moves that his hedge fund has made in the market are now making headlines.
Gates founded Bill & Melinda Gates Foundation Trust, the investment arm of the Gates Foundation, in 2000. His personal money manager, Michael Larson, has since been overseeing the equity investments of the fund. The value of the equity portfolio of the fund was close to $23 billion at the end of the fourth quarter of 2021. The fund mostly invests in firms with a long-term strategy in mind. Over the past few quarters, the fund has started dumping the shares of many long-term holdings, signaling a shift in strategy or preparation for a possible economic crisis.
Between October and December, the portfolio value of the fund increased by more than $1 billion. During this time, the fund made new purchases in two stocks, sold out of two stocks, and reduced holdings in three stocks. The top ten holdings of the fund comprise over 92% of the portfolio. Some of the top stocks in the portfolio at the end of September included Walmart Inc. (NYSE:WMT), FedEx Corporation (NYSE:FDX), and United Parcel Service, Inc. (NYSE:UPS), among others discussed in detail below.
Our Methodology
These stocks were picked from the fourth quarter regulatory filings of Bill & Melinda Gates Foundation Trust. All the stocks listed below are long-term holdings of the fund present in the portfolio for around five or more years.
Bill Gates Portfolio: Stocks to Buy and Hold for Over 5 Years
10. Berkshire Hathaway Inc. (NYSE:BRK-A)
Number of Hedge Fund Holders: 108
Berkshire Hathaway Inc. (NYSE:BRK-A) is a conglomerate with interests in the insurance, freight rail transportation, and utility businesses. Latest data shows that Bill & Melinda Gates Foundation Trust holds more than 33 million shares in the company worth more than $10 billion, representing 43.84% of the portfolio. The fund has decreased its holding in the firm by 13% between October and December compared to filings for the third quarter.
Berkshire Hathaway Inc. has featured in the Gates portfolio, with a minor break in late 2012 and early 2013, since the third quarter of 2012. The fund first bought shares of the firm at an average price of around $128,000 per share. The stock is presently worth around $536,000 per share. The fund has reduced its stake in the firm in four of the last five quarters.
At the end of the fourth quarter of 2021, 108 hedge funds in the database of Insider Monkey held stakes worth $19.3 billion in Berkshire Hathaway Inc., compared to 106 in the preceding quarter worth $19.4 billion.
Just like Walmart Inc., FedEx Corporation, and United Parcel Service, Inc., Berkshire Hathaway Inc. is one of the stocks that elite investors are monitoring.
In its Q1 2021 investor letter, Vltava Fund, an asset management firm, highlighted a few stocks and Berkshire Hathaway Inc. was one of them. Here is what the fund said:
“Despite the considerable rise in stock markets over the past year, there are still many attractive opportunities. Human nature also is playing a bit into our hands. Investor crowds often chase popular stocks, hot IPOs, or mysterious SPACs and completely leave aside stocks they consider boring and not sexy enough. A typical example of this category is our long-term largest position in Berkshire Hathaway. Since we bought it for the first time, its price has nearly quadrupled and yet it remains just as undervalued today as it was at that time. Considering the current rate at which it is buying back its own shares and the amount of cash that Berkshire Hathaway Inc. has, my greatest wish as a shareholder is for the company’s share price to remain as low as possible for as long as possible.”
9. Waste Management, Inc. (NYSE:WM)
Number of Hedge Fund Holders: 35
Waste Management, Inc. (NYSE:WM) provides waste management environmental services. According to 13F data from December 2021, Bill & Melinda Gates Foundation Trust owns over 18 million shares in the firm worth $3.1 billion, representing 13.53% of the portfolio. The fund did not register any activity around the stock during the fourth quarter of 2021.
Waste Management, Inc. has featured in the Gates portfolio consistently since the third quarter of 2012. The fund first bought over 18 million shares in the firm at an average price of $33.76. The price of the stock has now climbed above $160 per share. The fund has neither decreased nor increased its stake in the firm since first buying the shares.
At the end of the fourth quarter of 2021, 35 hedge funds in the database of Insider Monkey held stakes worth $4.1 billion in Waste Management, Inc., compared to 36 in the preceding quarter worth $3.6 billion.
8. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 53
Caterpillar Inc. (NYSE:CAT) markets construction and mining equipment. Securities filings show that Bill & Melinda Gates Foundation Trust owned more than 9.6 million shares of the firm at the end of the fourth quarter of 2021 worth over $2 billion, representing 8.71% of the portfolio. The fund kept its stake in the firm unchanged between October and December when compared to third quarter filings.
Caterpillar Inc. has featured in the Gates portfolio consistently since the third quarter of 2012. The fund first purchased over 10 million shares in the firm at an average price of $86.24 per share. This holding has remained more or less constant and the share price of the company has now jumped to around $201. The fund has made minor reductions to the Caterpillar Inc. stake in two of the last four quarters.
Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading shareholder in Caterpillar Inc. with 7 million shares worth more than $1.4 billion.
In its Q2 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Caterpillar Inc. was one of them. Here is what the fund said:
“Having followed the company closely for north of a decade, Caterpillar Inc. 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.”
7. Canadian National Railway Company (NYSE:CNI)
Number of Hedge Fund Holders: 42
Canadian National Railway Company (NYSE:CNI) engages in the rail and related transportation business. Regulatory filings show that Bill & Melinda Gates Foundation Trust owned more than 13 million shares in the firm at the end of December 2021 worth $1.6 billion, representing close to 7% of the portfolio. The fund did not sell or buy new shares of Canadian National Railway Company during the fourth quarter of 2021.
A glance back at the historical portfolio of Gates reveals that Canadian National Railway Company has been a constant holding of the fund since the third quarter of 2012. The fund first purchased a stake in Canadian National Railway Company consisting of more than 17 million shares at an average price of $44.63 per share. This holding remained constant till late 2020 when the fund started decreasing stake in Canadian National Railway Company. It has dumped the stock in three of the last five quarters.
At the end of the fourth quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $7.7 billion in Canadian National Railway Company, the same as in the preceding quarter worth $7.3 billion.
6. Ecolab Inc. (NYSE:ECL)
Number of Hedge Fund Holders: 42
Ecolab Inc. (NYSE:ECL) provides water, hygiene, and infection prevention solutions. Mandatory filings show that Bill & Melinda Gates Foundation Trust owned over 4.3 million shares in the company at the end of the fourth quarter of 2021 worth $1 billion, representing 4.45% of the portfolio. Gates’ fund did not disclose any new activity around the water and hygiene firm between October and December.
Ecolab Inc. is another long-term holding of the fund, having featured in the portfolio consistently for nearly the past ten years. The fund first bought a stake in the firm back in late 2012, buying over 4.3 million shares at an average price of $65.67. This holding has remained constant and the share price of the firm is now over $226.
At the end of the fourth quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $2.8 billion in Ecolab Inc., compared to 39 in the previous quarter worth $2.5 billion.
Along with Walmart Inc., FedEx Corporation, and United Parcel Service, Inc., Ecolab Inc. is one of the stocks that institutional investors are buying.
5. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 63
Walmart Inc. operates retail, wholesale, and other units across the world. Mandatory filings show that Bill & Melinda Gates Foundation Trust owned more than 6.9 million shares in the company at the end of the fourth quarter of 2021 worth over $1 billion, representing 4.35% of the portfolio. The fund did not register any new activity around the stock between October and December.
Walmart Inc. has been in the Gates portfolio since the third quarter of 2012. Between June and September 2012, the fund purchased 10.6 million shares in the firm at an average price of $73.17 per share. It then added to that stake slightly in the coming quarters. The fund started dumping the stock in early 2021. It has decreased its stake in the firm by almost half in the past four quarters.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Walmart Inc. with 5 million shares worth more than $729 million.
4. FedEx Corporation (NYSE:FDX)
Number of Hedge Fund Holders: 64
FedEx Corporation provides transportation, e-commerce, and business services. According to the latest 13F data, Bill & Melinda Gates Foundation Trust owned more than 1.4 million shares in the firm at the end of December 2021 worth $386 million, representing 1.68% of the portfolio. The fund kept its stake in the firm unchanged in the fourth quarter compared to third quarter filings.
FedEx Corporation has featured in the Gates portfolio since the third quarter of 2012. The fund first purchased a stake in the firm consisting of more than 3 million shares at an average price of $88.88 per share. This holding remained constant till early 2021 when the fund started dumping the shares. It reduced its stake in the firm by more than half in the first quarter of 2021.
At the end of the fourth quarter of 2021, 64 hedge funds in the database of Insider Monkey held stakes worth $2.4 billion in FedEx Corporation, compared to 49 in the previous quarter worth $1.6 billion.
In its Q3 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and FedEx Corporation was one of them. Here is what the fund said:
“Our weakest Q3 performers included FedEx Corporation. 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 Corporation 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 Corporation 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.”
3. Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF)
Number of Hedge Fund Holders: 7
Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) makes and sells the Coca-Cola trademark beverages. Securities filings show that Bill & Melinda Gates Foundation Trust owned more than 6.2 million shares in the company at the end of the fourth quarter of 2021 worth over $340 million, representing 1.48% of the portfolio. Gates’ fund neither bought nor sold any shares of the company between October and December.
Coca-Cola FEMSA, S.A.B. de C.V. has been a constant feature in the Gates portfolio since the third quarter of 2012. Back then, the fund had purchased 6.21 million shares at an average price of $122.24. This holding has remained constant throughout the years, although the share price of the company has fallen by more than half since then.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in Coca-Cola FEMSA, S.A.B. de C.V. with 1.6 million shares worth more than $188 million.
2. Grupo Televisa, S.A.B. (NYSE:TV)
Number of Hedge Fund Holders: 17
Grupo Televisa, S.A.B. (NYSE:TV) operates as a media company. At the end of December 2021, Bill & Melinda Gates Foundation Trust owned over 7 million shares in the firm worth close to $66 million, representing 0.28% of the portfolio. The fund decreased its stake in the firm by 57% during the fourth quarter of 2021 compared to filings for the third.
Grupo Televisa, S.A.B. has been a constant holding of the Gates fund since the third quarter of 2012. The company first purchased a stake in the firm consisting of more than 16.8 million shares at an average price of close to $23. This holding remained constant till late 2021 when the firm started reducing its stake in the firm. The share price of the firm has dropped to around $10.26.
At the end of the fourth quarter of 2021, 17 hedge funds in the database of Insider Monkey held stakes worth $669 million in Grupo Televisa, S.A.B., compared to 16 in the previous quarter worth $843 million.
In its Q2 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Grupo Televisa, S.A.B. was one of them. Here is what the fund said:
“Grupo Televisa, S.A.B., 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 Grupo Televisa, S.A.B., 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 Grupo Televisa, S.A.B. 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.”
1. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 55
United Parcel Service, Inc. provides letter and package delivery services. Securities filings show that Bill & Melinda Gates Foundation Trust owned over 2.2 million shares in the firm at the end of the fourth quarter of 2021 worth $489 million, representing 2.13% of the portfolio.
United Parcel Service, Inc. has been in the portfolio of the Gates fund since the fourth quarter of 2014. The fund first purchased a stake in the firm consisting of over 4.5 million shares at an average price of $105.52 per share. This holding remained constant till early 2021 when the fund started dumping the stock. The fund has decreased its stake in the firm in two of the last four quarters.
Among the hedge funds being tracked by Insider Monkey, New York-based Renaissance Technologies is a leading shareholder in United Parcel Service, Inc. with 1.1 million shares worth more than $249 million.
In its Q4 2021 investor letter, Saturna Capital, an asset management firm, highlighted a few stocks and United Parcel Service, Inc. was one of them. Here is what the fund said:
“Given the likelihood of rising inflation and interest rates ahead, we anticipate adjustments to the portfolio to reduce exposure to highly valued stocks dependent on low interest rates to support terminal year valuations, while seeking investments in companies more correlated with a return to economic normalcy. Despite the share price decline, it remains expensive with modest growth. We sold our position in United Parcel. The United Parcel Service, Inc. sale was premature, and we may re-engage given an opportunity.”
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This article is originally published at Insider Monkey.
