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Billionaire Bill Gates’ Big Moves: The Coca-Cola Company (KO), The Procter & Gamble Company (PG), Comcast Corporation (CMCSA)

The Gates Foundation boosted stakes in…

The Coca-Cola Company (NYSE:KO) is the Gates Foundation’s second largest holding after a 45% increase in shares. The beverage company now makes up 7.3% of its portfolio. The beverage business pays a 2.9% dividend yield and has upped its dividend rate for fifty consecutive years.

Coke owns fifteen brands that generate over $1 billion in revenue and has seen some of its best growth in emerging markets, namely India, which saw double-digit sales growth last year. Another key emerging market for the company includes China; The Coca-Cola Company (NYSE:KO) plans to invest $4 billion in China over the next three years, which will help transition from 43% of its revenues derived from developed markets to only 33% by 2020.

Gates upped his stake in The Procter & Gamble Company (NYSE:PG) by 1,200% last quarter. The consumer products company has strong brand recognition, and its “fifty top brands” make up over 90% of revenues. Key initiatives for the company includes expanding beyond developed markets and cutting costs. Sales in developed markets have grown at 12% annually over the last 12 years, and P&G hopes it can leverage the same growth in emerging markets. Meanwhile, cost cutting plans include $10 billion in cost reductions by the end of fiscal 2016, as well as reducing its manufacturing platforms from 500 in 2009 to 150 by 2014, saving nearly $500 million alone.

Fellow billionaire Warren Buffett is also a fan of The Procter & Gamble Company. Buffett has the consumer products company as his fifth largest holding. After concerns voiced by billionaire Bill Ackman relating to P&G’s management (read more here), management looks to be taking some steps to turn the company around. P&G still remains cheaper than major peer Colgate Palmolive, trading at 17.5x earnings and 13x cash flow, versus Colgate Palmolive’s 21x and 18x, respectively. Let’s not forget P&G’s dividend; the company has increased its dividend for fifty-six consecutive years.

Don’t be fooled.

The moves made by Gates signal a big move toward consumer products, including Coca-Cola and Procter & Gamble. I think he has taken some cues from Buffett with respect to Coca-Cola and Procter & Gamble, both staple investments of Berkshire. Both companies, Coca-Cola and P&G, also pay dividend yields of 2.9%, and both are low volatile stocks, with three-year betas of less than 0.4.

Meanwhile, the competition in the video business is seeing pressures from telecoms, and as a result Comcast will still see pressure over the interim. Competitive pressures for Costco also make the stock unappealing in the current investing environment. Siemens is a growth story that is an interesting pick for Gates, being a lesser known name and higher growth “tech” stock, but still a solid opportunity.

The article Billionaire Bill Gates’ Big Moves originally appeared on and is written by Marshall Hargrave.

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