In this article, we presented the top 15 picks in Bill Gates’ stock portfolio.
The Microsoft founder and philanthropist Bill Gates’ is the fourth richest man in the world with a net worth of $120 billion, according to Forbes. Gates, 64, decided to step down from Microsoft’s board early this year to dedicate more time and efforts to his charitable activities through the Bill & Melinda Gates Foundation.
Founded in 2000, Bill & Melinda Gates Foundation Trust has been seeking to earn money for charitable activities, including education, global health, development, and climate change. In order to generate a sustainable source of money, Bill & Melinda Gates Foundation Trust started investing money in companies that have a long history of returning cash to investors in the form of dividends and steady share price gains.
The world’s renowned investor Warren Buffet is the trustee of Gates foundation and he has pledged the majority of his fortune to the Bill & Melinda Gates Foundation Trust.
Buffett has donated 10 million shares of Berkshire Hathaway (BRK.B) to Gates foundation in 2006, which was then valued at around $31 billion. Since then, Buffett’s Berkshire has been contributing significantly to charitable causes and has lifted the total number of shares to nearly 47 million.
Bill Gates
Bill & Melinda Gates Foundation Trust portfolio has been managed by a team of managers since its inception. The portfolio managers are investing money in companies that have established business models and sustainable growth outlook. This is because the Bill & Melinda Gates Foundation Trust portfolio includes blue-chip stocks with a strong dividend growth history.
Despite massive stock market volatility this year amid pandemic, the portfolio managers have kept their investment in blue-chip stocks with small changes in the overall portfolio. The time held for top 20 stocks stands around 31.65 quarters while the trust has been holding top 10 stocks 32.30 quarters on average.
According to the latest quarterly filings, Bill & Melinda Gates Foundation Trust portfolio managers sold out only one stock and slashed its position in two stocks. Meanwhile, portfolio managers initiated a position in two stocks and added to its two existing positions. The market value of the portfolio increased from $17 billion in the June quarter to $22 billion at the end of the September quarter.
While Bill Gates’ reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 78 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
In a low-interest-rate environment, defensive investors and retirees have been wondering which stocks to buy. For these returns seekers, it might be a good idea to simply copy Bill Gates stock portfolio? Let’s start examining the top 15 stocks of the Bill Gates’ stock portfolio to gauge whether these stocks have the potential to offer sustainable returns over the long-term.
15. Grupo Televisa, S.A.B. (NYSE: TV)
The media company Grupo Televisa, S.A.B. (NYSE: TV) is one of the permanent members of Bill Gates portfolio. Trust first initiated a position in the media company during the second quarter of 2002.
The media company is the fifteenth largest stock holding of Bill Gates’ stock portfolio, accounting for 0.47% of the portfolio. Shares of Grupo Televisa have been underperforming over the past five years due to changing market trends. Its shares are down almost 70% in the last ten years. Year over year drop in revenues has negatively impacted its share price performance in the past years.
14. Alibaba Group Holding Limited (NYSE: BABA)
The Chinese e-commerce platform Alibaba Group Holding Limited (NYSE: BABA) is relatively a newcomer in Bill Gates’ stock portfolio. The portfolio manager has created a stake in Alibaba during the first quarter of 2020. The trust has bought 552,383 shares valued at $162 million, accounting for 0.74% of the overall portfolio.
Hedge funds are also bullish on the largest Chinese e-commerce platform. Baron Opportunity Fund recently commented on Alibaba in a shareholders letter:
“Alibaba Group Holdings Limited is the largest retailer and e-commerce company in China. Alibaba operates shopping platforms Taobao and Tmall and owns 33% of soon-to-be publicly traded Ant Financial, which operates Alipay, China’s largest third-party online payment provider. Shares of Alibaba were up on sustained core commerce recovery benefiting from improved purchase frequency and spending per order. We believe Alibaba’s core business remains highly profitable, complemented by rapid growth in the cloud business and inflection in the Cainiao logistics and New Retail segments.”
13. Amazon (AMZN)
The world’s largest e-commerce platform Amazon (AMZN) is the thirteenth largest stock holding of Bill & Melinda Gates Foundation. The trust has created a skate in Amazon early this year by purchasing 60,460 shares valued at $190 million. The trust benefited from its Amazon stake because shares of the largest e-commerce giant jumped more than 70% year to date.
Hedge funds believe Amazon has more upside potential in the days ahead. Baron Opportunity Fund pointed out Amazon’s growth potential in a letter to shareholders.
Baron Opportunity Fund said: “Amazon.com, Inc. is the world’s largest retailer and cloud services provider. Shares were up on strong second quarter revenue metrics – with paid unit growth accelerating to 57%, a startling figure for a company of this scale – as Amazon benefited from recent investments in logistics and distribution to meet increased COVID-19-related demand. Amazon has the unique ability to deliver all the necessities of life safely to your doorstep, including groceries. Amazon also reported a stunning beat in operating profit, with $5.8 billion of operating income, almost six times Wall Street’s expected figure. While e-commerce penetration is rising rapidly and Amazon continues to grow its addressable market by entering new verticals, we continue to view Amazon Web Services as the more material driver of the company given its leadership in the vast and growing cloud infrastructure market and potential to compete in application software in the years to come.”
12. Apple Inc. (AAPL)
The world’s largest technology giant Apple (AAPL) is a member of Bill Gates’ stock portfolio since the beginning of this year. Apple stock holding accounts for 1.05% of the overall portfolio valued at $232 million. Shares of Apple soared almost 70% this year. In addition to share price gains, Apple offers hefty dividends to investors.
Here is what RiverPark Advisors said: “Apple: AAPL shares were a top contributor as the company reported record fiscal third-quarter results, with revenue up 11% to $60 billion and EPS up 18% to $2.58 – both well ahead of expectations. Revenue was driven by double-digit growth in both Products (up 10%) and Services (up 15%), as well as growth in every geographic segment.”
11. Schrodinger, Inc. (SDGR)
Bill & Melinda Gates Foundation’s stock portfolio reduced its stake in the healthcare company Schrodinger, Inc. (SDGR) during the latest quarter. The trust first initiated a stake in Schrodinger during the first quarter of this year. Despite the 28% shares sales, Schrodinger still accounts for 1.07% of the portfolio.
Baron Health Care Fund thinks Schrödinger is a good stock to buy and hold. Here’s what Baron Health Care Fund said: “Schrodinger, Inc. is a hybrid computer science, physics, and biotechnology company that has an established software suite allowing drug developers to explore the endless range of possible drug/target interactions allowed via the rules governing single atom interactions. Given that Schrodinger was the best performing IPO in the entire biotechnology space in the first six months of 2020, we were not surprised to see some mean reversion in the third quarter. We remain investors for both the established software business and the biotechnology development arm.”
10. Coca-Cola FEMSA, S.A.B. de C.V. (NYSE: KOF)
Coca-Cola FEMSA, S.A.B. de C.V (NYSE: KOF) has been a permanent member of Bill Gates’ stock portfolio over the last fifteen years. The trust currently holds 6.2 million shares valued at $253 million, accounting for 1.15% of the overall portfolio. Shares of Coca-Cola FEMSA have been under pressure over the years due to increasing market competition.
9. United Parcel Service, Inc. (NYSE: UPS)
The courier company United Parcel Service, Inc. (NYSE: UPS) is the ninth-largest stock holding of the Bill & Melinda Gates Foundation stock portfolio. It is also among the long-running investments of trust. Bill Gates’ stock portfolio manager first bought United Parcel Service in 2004. The trust has benefited from its investment both in the form of share price gains and dividends. Shares of United Parcel Service jumped 140% in the last ten years.
At the end of the third quarter, a total of 57 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 54% from one quarter earlier. That’s a huge increase for a company UPS’ size. Other investors bullish on the company included Tybourne Capital Management, Citadel Investment Group, and Adage Capital Management. In terms of the portfolio weights assigned to each position Masters Capital Management allocated the biggest weight to United Parcel Service, Inc. (UPS), around 7.2% of its 13F portfolio. Tybourne Capital Management is also relatively very bullish on the stock, designating 5.02 percent of its 13F equity portfolio to UPS.
8. FedEx Corporation (NYSE:FDX)
The air courier service FedEx Corporation (NYSE: FDX) is the long-running stock holding of Bill Gates’ stock portfolio. The trust first initiated a position in FedEx Corporation in fiscal 2005. FedEx offered both dividends and share price gains to investors. Its share price soared 87% in the last year alone.
Longleaf Partners is showing confidence in FedEx fundamentals. Longleaf Partners’ said: “FedEx, the transportation and logistics company, was the top contributor after reporting outstanding quarterly performance, with earnings more than 66% above estimates and excellent free cash flow (FCF) conversion. The disappearance of competing passenger airline underbelly capacity helped Express grow volumes 28%, while Ground proved its critical role in e-commerce logistics with a 31% volume increase. CEO Fred Smith’s ambitious goal to deliver 100 million e-commerce packages per year is now on track for 2023, years ahead of schedule.”
7. Ecolab Inc. (NYSE: ECL)
Specialty Chemicals Ecolab Inc. (NYSE: ECL) has been a member of Bill & Melinda Gates Foundation stock portfolio over the past ten years. It is the seventh-largest stock holding, according to the latest filings. The investments account for 3.95% of the overall portfolio. Ecolab shares jumped 336% in the last ten years. The company has raised dividends in the past 28 straight years.
6. Crown Castle International Corp (NYSE: CCI)
The trust first initiated a stake in the real estate company Crown Castle International Corp (NYSE: CCI) during the second quarter of 2007. The investment looks profitable considering Crown Castle’s share price growth of 270% in the last ten years. The real estate company also offers a healthy dividend yield of 3.5%.
We talked about Crown Castle’s business in detail in this article. Here is an excerpt:
Crown offers cell towers under long-term agreements with telecom carriers. A typical tower leases has an initial term of 20 years, which then gets renewed every five years. Those leases cannot be broken easily (perhaps a bankruptcy of a carrier is the only way out from the contractual clauses). There are contractual escalation amounts each year, which ensures growth in profits over time. There is a considerable amount of red tape in establishing a cell site location, and navigating local laws and regulations. Needless to say, it is not easy to set up towers just like that. It would be difficult for a competitor to set up a tower next door.
Companies earn their money by signing up several customers to its towers. The return on investment increases from low single digit percentages for one customer to a double-digit percentage with three or more clients. Therefore, having multiple carriers is good for Crown Castle (CCI).
Growth comes from rent escalations, offset by non-renewals. Growth also comes from acquisitions as well.
The risk comes from consolidations with major clients – when the number of potential clients decreases over time, the potential profits are limited. The merger between Sprint and T-Mobile could impact cell tower companies like this one. However, while Sprint and T-Mobile account for a total of 38% of CCI’s revenues, not all is lost since there is overlap in just 5% of CCI’s towers. In other words, the company would most likely lose a little over 5% of revenues if Sprint & T-Mobile were to merge and shut down overlapping sites right away. In reality, sites can be decommissioned but they would still have to pay until the end of the contractual term. The weighted average remaining lease term on that 5% is five to seven years.
The FFO payout has remained around 80% since 2015. The company converted to a REIT in 2014, after which it immediately ramped up its dividend payout. I find it to be sustainable, and well covered from the dependable rent streams under long-term contracts with escalation clauses.
5. Walmart Inc. (WMT)
The retail stores chain Walmart Inc. (NYSE: WMT) is the fifth-largest stock holding of Bill Gates’ stock portfolio. Walmart’s stake accounts for 7.35% of the overall portfolio. The trust first initiated a stake in Walmart in 2006. Walmart is considered a safe stock for defensive investors amid its dividend growth history.
Shares of Walmart jumped 170% in the last ten years. It has also raised dividends in the past 47 straight years. The company currently offers a quarterly dividend of $0.54 per share. Walmart is among the 10 most profitable companies in the US and it is making significant investments into ecommerce right now to defend its turf against Amazon. We talked about this topic in a recent article.
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4. Caterpillar Inc (CAT)
Caterpillar Inc. (NYSE: CAT) is one of the most favorite stocks of the Bill & Melinda Gates Foundation stock portfolio. The trust currently holds 11 million shares of CAT valued at $1.67 billion, accounting for 7.61% of the overall portfolio. Trailing Bill & Melinda Gates Foundation Trust was Fisher Asset Management, which amassed a stake valued at $893.9 million. Citadel Investment Group, Diamond Hill Capital, and PEAK6 Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Bill & Melinda Gates Foundation Trust allocated the biggest weight to Caterpillar Inc., around 7.61% of its 13F portfolio. Axel Capital Management is also relatively very bullish on the stock, designating 7.02 percent of its 13F equity portfolio to CAT.
Caterpillar has a long dividend growth history. It currently offers a dividend yield of 2.28%.
Despite pandemic related challenges, Caterpillar management seeks to expand its growth plans. “I’m proud of our global team’s performance as we continue to safely navigate the pandemic while remaining firmly committed to serving our customers,” said Caterpillar Chairman and CEO Jim Umpleby. “Our third-quarter results largely aligned with our expectations, and we’re encouraged by positive signs in certain industries and geographies. We’re executing our strategy and are ready to respond quickly to changing market conditions.”
3. Canadian National Railway Company (CNI)
Canadian National Railway Company (NYSE: CNI) is the long-running investment of Bill Gates’ stock portfolio. The trust first initiated a position in railway stock in 2002. Other prominent investors were getting more bullish on CNI. The number of long hedge fund bets improved by 2 in recent months. Canadian National Railway Company (NYSE:CNI) was in 28 hedge funds’ portfolios at the end of June. The all time high for this statistics is 29.
It is the third-largest stock holding of the Bill & Melinda Gates Foundation stock portfolio, accounting for 8.26% of the overall portfolio. Arrowstreet Capital, Point72 Asset Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Bill & Melinda Gates Foundation Trust allocated the biggest weight to Canadian National Railway Company, around 8.5% of its 13F portfolio. Heronetta Management is also relatively very bullish on the stock, designating 6.0 percent of its 13F equity portfolio to CNI. Shares of Canadian National Railway Company jumped 230% in the last ten years. In addition, the company has raised dividends in the last 22 successive years. It currently offers a quarterly dividend of $0.44 per share, yielding around 1.55%.
2. Waste Management, Inc. (WM)
Waste Management, Inc. (NYSE: WM) is the second-largest stock holding of Bill Gates’ portfolio. The trust first initiated a position in Waste Management in 2002. It is currently accounting for 9.55% of the overall portfolio valued at $2.1 billion. Shares of Waste Management jumped 220% in the last ten years and it has also raised dividends in the past 17 straight years.
Waste Management has generated 23% revenue growth in the latest quarter, with expectations that revenue momentum will accelerate in the upcoming quarters.
Dmitry Kalinovsky/Shutterstock.com
1. Berkshire Hathaway Inc. (BRK.B)
Warren Buffett’s investment holding firm Berkshire Hathaway (NYSE: BRK.B) is the largest stock holding of Bill Gates portfolio. It accounts for 45% of the overall portfolio valued at $10 billion. Although Berkshire Hathaway does not offer dividends to investors, Bill Gates’ portfolio benefited from the robust share price gains. The shares of Buffett’s Berkshire grew 180% in the last ten years.
Nomadic Value Investors talked about Berkshire Hathaway in their Q2 investor letter:
“We added to Berkshire Hathaway. I won’t spend too much talking about this, but BRK is as attractively priced as it’s been in some time. The press’s and FinTwit’s fascination with “Warren’s lost it” is at a cyclical peak and is complete noise. However, the valid bear argument is that BRK is too big to compound at good rates going forward, and subsidiary company performance will be weak for the next couple of years with its high exposure to air traffic (Precision Cast Parts and previously held airline stocks) and holdings in “old economy” manufacturing and retail businesses. Also, short-term there’s an unknown consequence of insurance claim payouts and/or refunds13 . We wouldn’t completely disagree with these judgments, and the optics are certainly bad when BRK doesn’t buy back shares in a quarter with a substantial sell-down. However, with a long-term lens and given the management style of BRK (conservative talk and overperform), we will likely be quite satisfied in the future – whatever that looks like. Meanwhile, we’ve gotten into a range where 30%-50% of BRK is free. Are the actual growth prospects for Berkshire this dire? Berkshire is our largest position.”
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