Republic Services Inc. (RSG): Bill Gates’ Cascade Investment Continues to Load on Stock

Republic Services Inc. (NYSE:RSG) continues to feel Bill Gates’ love. Cascade Investment, Mr. Gates’ investent arm, has been consistently buying the company’s stock for a long time now, but still continues to seem bullish about its future. Since we last reported a 102.2 million shares stake, two weeks ago, Cascade has disclosed several new purchases, for prices ranging between $39.00 and $39.30 per share. Following these transactions (the last of which took place on September 4, according to a Form 4 filed on September 8), Cascade Investment owns almost 102.38 million shares of the company, which account for roughly 29% of its total shares outstanding.

We have been following Mr. Gates’ activity in Republic Services Inc. (NYSE:RSG) since mid-June, and the tech guru has shown himself really confident about the company’s potential.  In fact, another asset management firm associated with Microsoft Corporation (NASDAQ:MSFT)’s cofounder, Bill and Melinda Gates Foundation Trust, last disclosed ownership of 1.35 million shares of Republic Services, Inc. (NYSE:RSG)’s common stock.

Other major hedge funds betting on this company are Mario Gabelli‘s GAMCO Investors, which last acknowledged holding 2.86 million shares of the company, worth more than $100 million, following a 12% increase in its stake over the second quarter of 2014, and Israel Englander’s Millennium Management, which, after adding 611% to its holdings, owns more than half a million shares.
Republic Services, Inc. (NYSE:RSG) is a $14 billion market cap provider of services in the domestic non-hazardous solid waste industry. It owns or operates 194 transfer stations, 191 active solid waste landfills, 74 materials recovery facilities, and 69 landfill gas and renewable energy projects.

The stock is up more than 18% year-to-date, but still trades at a discount to its peers, at 19.7 times the company’s earnings, compared to a P/E of 46x. In addition, the company has a strong history of returning cash to shareholders. Dividends per share have been growing consistently over the past five years, at an average of 8.3%; the stock pays a 2.85% annualized dividend yield ($0.26 per share per quarter). In addition, the company boasts above average margins and returns on equity and assets, which are also expected to ameliorate as volumes grow.

Disclosure: Javier Hasse holds no positions in any stocks or funds mentioned.