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Strategic Hotels and Resorts Inc (BEE): Bill Gates’ Cascade Buys More Shares

As a new filing with the Securities and Exchange Commission showed, Cascade Investment has recently purchased some 4.91 million shares of Strategic Hotels and Resorts Inc (NYSE:BEE). Following the acquisition of shares, Cascade holds around 21.72 million shares, the activist stake representing 7.9% of the company’s outstanding stock. The securities were purchased in four transactions at an average price of $12.99 per share. Cascade Investment is the investment arm of Bill Gates, who has recently been named the richest person in the world.

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Cascade Investment is managed by Michael Larson, who also manages the Bill & Melinda Gates Foundation Trust. With over 20 years of managing Mr. Gates’ money, Mr. Larson plays a major role in growing Mr. Gates’ wealth, a large part of which is dedicated towards various charitable projects. A couple of days ago, Mr. Gates was named by Forbes as the richest man in the world, outranking Mexican telecom businessman Carlos Slim, and iconic investor Warren Buffett. Mr. Gates’ net worth appreciated by $3 billion during the last year to a total of $79 billion. Cascade does not file 13F filings, therefore we can’t determine how much money the entity has in equities, or what other companies Mr. Larson prefers to invest money in. Cascade also does not report any data on its returns, but previous reports stated that Mr. Larson’s conservative approach has provided steady annual returns over the years.

However, from the last filings with the Securities and Exchange Commission, we can see that Cascade has been holding shares of Liberty Global plc (NASDAQ:LBTYA), disclosing some 8.74 million shares in the most recent filing. In Arcos Dorados Holding Inc (NYSE:ARCO), Cascade last reported ownership of 8.58 million shares, while in Thai Fund Inc. (NYSE:TTF) and Waste Management, Inc. (NYSE:WM), Cascade holds around 498,900 shares and 11.26 million shares respectively. Among other companies in which the entity reported stakes previously are Deere & Company (NYSE:DE), Berkshire Hathaway Inc. (NYSE:BRK.B), and Republic Services, Inc. (NYSE:RSG).

Cascade Investment has been holding shares of Strategic Hotels and Resorts Inc (NYSE:BEE) since October, 2008, according to filings with the SEC. Over the years, as the stock more than doubled in value, Mr. Larson has substantially increased the stake from 4.19 million shares disclosed initially. Moreover, aside from holding shares of Strategic Hotels and Resorts, in 2013, Mr. Gates’ investment arm entered into an agreement to acquire one of the company’s resorts. Mr. Gates purchased Four Seasons Punta Mita in Mexico for around $200 million. Aside from the resort that contains over 170 guest rooms and suites, Cascade also entered into an agreement to acquire a 48-acre land parcel in La Solana.

The last acquisition of shares of Strategic Hotels and Resorts Inc (NYSE:BEE) comes only a couple of days after the company announced its financial results for the last quarter and full-year 2014. Strategic Hotels & Resorts, a self-administered and self-managed real estate investment trust (REIT), posted significant revenue growth to $313 million for the fourth quarter of 2014, versus $217 million a year earlier. However, the company’s earnings fell to $0.01 per share, from $0.02. Additionally for the full year, Strategic Hotels and Resorts’ revenue appreciated to $1.09 billion from $900 million a year earlier and diluted EPS jumped to $1.30 from a loss of $0.06 posted for 2013. Despite top and bottom line growth, analysts have not been impressed by the performance of the REIT. Therefore, last week, JMP Securities lowered its price target to $15.00 from $16.00 with a ‘Market Outperform’ rating, and TheStreet downgraded the stock to ‘Hold’ from ‘Buy’.

Strategic Hotels and Resorts Inc (NYSE:BEE)

Among over 700 funds that we track at Insider Monkey, the fourth quarter showed an increase in popularity for Strategic Hotels and Resorts Inc (NYSE:BEE), as the number of funds reporting ownership of the REIT’s shares in the last round of 13F filings increased to 20 from 14 a quarter earlier. Moreover, the company has seen an inflow of capital, to $146.01 million held in aggregate by the funds that we track, versus $120.64 million in the previous quarter. Surprisingly or not, Mr. Gates’ other entity managed by Mr. Larson, the Bill & Melinda Gates Foundation Trust is not among the REIT’s shareholders. However, during the fourth quarter, Strategic Hotels and Resorts Inc (NYSE:BEE) attracted the attention of several billionaires, such as Israel Englander of Millennium Management and Jim Simons of Renaissance Technologies, both of whom initiated stakes. At the end of 2014, Millennium and Renaissance held 1.23 million shares and 914,900 shares respectively.

Disclosure: None