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Bill Gates’ Latest Stock Portfolio: Top 10 Picks

In this article, we take a look at the top 10 picks from Bill Gates’ latest stock portfolio. You can skip our detailed analysis of Bill & Melinda Gates Foundation Trust and go directly to Bill Gates’ Latest Stock Portfolio: Top 5 Picks. Bill Gates is a prominent name in the tech industry. He’s the […] Read More...

In this article, we take a look at the top 10 picks from Bill Gates’ latest stock portfolio. You can skip our detailed analysis of Bill & Melinda Gates Foundation Trust and go directly to Bill Gates’ Latest Stock Portfolio: Top 5 Picks

Bill Gates is a prominent name in the tech industry. He’s the founder of Microsoft Corporation (NASDAQ:MSFT) and remained its CEO until the year 2000. The tech billionaire together with his former wife Melinda Gates, founded Bill & Melinda Gates Foundation Trust in the same year. The fund’s investment wing, managed by Michael Larson, invests in equities whose returns are spent on charitable causes and grants. 

However, The Wall Street Journal reported that Bill Gates makes his own investment decisions when it comes to tech and biotech stocks, separate from the portfolio managed by Larson.

Speaking of which, screenshots of an alleged message conversation between Elon Musk and Bill Gates were tweeted by a Twitter account on April 22 which was confirmed by Musk to have been legitimate. 

According to the chat, the Microsoft founder had a $500 million short position on Tesla, Inc. (NASDAQ:TSLA) which displeased the Tesla CEO who accused Gates, who wanted to discuss “philanthropy possibilities,” of not being serious on climate change because of his “massive” shorting of Tesla, Inc. (NASDAQ:TSLA) which according to Musk’s own claim, was the company that was doing “the most” to solve climate change. 

Bill Gates later appeared in a YouTube interview and responding to Musk’s tweets, said that Tesla, Inc. (NASDAQ:TSLA) has no shortage of capital and someone shorting Tesla, Inc. (NASDAQ:TSLA) stock does not slow him (Musk) down or hurt him in any way. He observed that cars make up only 16% of total carbon emissions and the other 84% emissions also need solving, adding that he’s spent a “lot more” money to solve climate change than Elon Musk.  

The Gates Foundation’s stated goal is to combat disease, poverty and inequity in poorer countries and it has financially supported over 2,100 grants. In 2020, the fund provided direct grantee support of $6 billion for causes like global development, global health, and gender equality.

In 2019, Bill Gates wrote a piece for Wall Street Journal where he explained how his $10 billion investment in medical logistics returned $200 billion in social and economic benefits around the world over the past two decades. Gates reveals that the same amount of investment in the S&P 500 for the same amount of time would have only roughly returned inflation-adjusted $12 billion, or $17 billion with reinvested dividends. 

The investment trust/hedge fund was reported in 2020 to be the second largest charitable foundation behind Novo Nordisk Foundation with $50 billion in assets. The fund’s portfolio value stands at $19.7 billion as of the first quarter of 2022.

Warren Buffett is one of the largest donors to the fund who pledged to give 10 million shares of Berkshire Hathaway Inc. (NYSE:BRK-B), the 5% of which the fund received in 2006. He’s also one of the foundation’s board members beside Bill and Melinda French Gates.

Investment Philosophy

Bill & Melinda Gates Foundation Trust is managed by an investor team led by Michael Larson, a former bond-fund manager at Putnam Investments. Larson, known for keeping a low-profile, makes investment decisions for the fund through Cascade Investment LLC.

Little is known about Larson’s investment philosophy due to his lack of public engagement on investment principles except for a 1999 Fortune interview. Larson explained he’s highly conservative and risk-averse when it comes to investing. He’s a traditional value-investor with a macroeconomic outlook. 

He explained that asset-allocation is where you make money, implying that he’s a diversifier. Larson doesn’t restrict himself to stocks and has other investments in financial instruments like debt securities, private equity, real estate and commodities. 

Above all, his main goal is to protect the principal sum of investment even if the returns are slow and steady. Under Michael Larson, the fund has delivered 11% compound annual return since 1995, outperforming the S&P 500 index by more than 1 percentage point. Larson is a long-term holder. One of the noteworthy features of the fund is the minimal portfolio turnover; there’s little change in its overall portfolio from a decade ago.

There are many blue chip stocks in the hedge fund’s portfolio. Some of the prominent ones include Berkshire Hathaway Inc. (NYSE:BRK-B), Caterpillar Inc. (NYSE:CAT) and Ecolab Inc. (NYSE:ECL).

Moving forward, we’ve listed the top 10 stocks that Gates’ foundation is invested in. 

Our Methodology:

We’ve listed the top 10 stock picks in Bill Gates’s portfolio by using data of Bill & Melinda Gates Foundation Trust’s Q1 portfolio. We’ve mentioned the fund’s stake value in the stocks, percentage of the hedge fund’s portfolio that the stocks take up and the number of total hedge funds invested in the stocks. All the data comes from the first quarter of 2022. 

Let’s move down to the list of top 10 stocks in the portfolio managed by Michael Larson for Bill & Melinda Gates Foundation Trust.  

10. Crown Castle International Corp. (NYSE:CCI)

Bill & Melinda Gates Foundation Trust’s Stake Value: $262 million

Percentage of Bill & Melinda Gates Foundation Trust’s Portfolio: 1.32%

Number of Hedge Fund Holders: 50

The number 10 on the list of top 10 stock picks of Bill Gates’ portfolio is Crown Castle International Corp. (NYSE:CCI). It principally operates as a real estate investment trust. The company also provides shared communication infrastructure like cell towers and fiber solutions. Its network includes over 40,000 cell towers across the US.

Bill & Melinda Gates Foundation Trust is the second largest shareholder in Crown Castle International Corp. (NYSE:CCI) behind Fisher Asset Management whose stake value in the company is almost double in comparison. The total equity held by 50 hedge funds amounts to $1.86 billion. 

On June 2, Crown Castle International Corp. (NYSE:CCI) was downgraded from Equal Weight to Underweight by Wells Fargo analyst Eric Luebchow. Luebchow set a $180 price target for the stock. 

Crown Castle International Corp. (NYSE:CCI) has an annual dividend yield of 3.7% as of June 15. The shareholders of record on June 15 are set to be paid $1.47 per share in dividend on June 30. This reflects a $5.88 dividend on an annualized basis. The company has a track record of 7 years for consecutively growing its dividend payouts. However, the dividend payout ratio is at 175%, far above the sustainable threshold of 75%. 

Crown Castle International Corp. (NYSE:CCI) beat Q1, 2022 consensus on both revenue and earnings by $46.42 million and $0.02 respectively, with a revenue of $1.74 billion and an EPS of $0.97. Although a long-held stock, Bill & Melinda Gates Foundation Trust’s stake in Crown Castle International Corp. (NYSE:CCI) is considerably smaller than in companies like Berkshire Hathaway Inc. (NYSE:BRK-B), Caterpillar Inc. (NYSE:CAT) and Ecolab Inc. (NYSE:ECL).

Amid rising interest rates, here is what ClearBridge Investments had to say about Crown Castle International Corp. (NYSE:CCI) in their Q1, 2022 investor letter:

“U.S. communications company Crown Castle International (NYSE:CCI) was the largest detractor from quarterly performance. Crown Castle is the leading independent owner and operator of wireless communications infrastructure in the U.S. with a portfolio of approximately 40,000 towers. The stock underperformed as, driven by rising interest rates, investors rotated away from defensive into more value-oriented sectors. Communications infrastructure remains attractive, however, as companies continue to deploy greater capital spend to support the strong tailwinds from 5G.”

9. Microsoft Corporation (NASDAQ:MSFT)

Bill & Melinda Gates Foundation Trust’s Stake Value: $291 million

Percentage of Bill & Melinda Gates Foundation Trust’s Portfolio: 1.47%

Number of Hedge Fund Holders: 259

Microsoft Corporation (NASDAQ:MSFT) is the technology company that Bill Gates founded himself. Microsoft Corporation (NASDAQ:MSFT) is known most famously for its Windows operating systems, powering over 1 billion computers worldwide. As of late, the company has been involved in expanding itself in the gaming industry.

On June 17, Following discussions with Xbox CFO Tim Stuart, Morgan Stanley analyst Keith Weiss said that Stuart outlined the vision of Microsoft Corporation (NASDAQ:MSFT) to develop its gaming business by taking advantage of the “3 C’s” of “content,” “community” and “cloud” and utilize the company’s entire platform to compete in the present day’s gaming industry. 

Microsoft Corporation (NASDAQ:MSFT), whose gaming franchise build out has hit “overdrive,” intends to expand its user base which should in turn grow its strategic revenue opportunities, said Weiss, who kept an Overweight rating on the MSFT stock with a price target of $372.

Investors of record on August 18 will be paid a dividend by Microsoft of $0.62 per share on September 8.

Bill & Melinda Gates Foundation Trust has more shares in Berkshire Hathaway Inc. (NYSE:BRK-B), Caterpillar Inc. (NYSE:CAT) and Ecolab Inc. (NYSE:ECL) than Microsoft Corporation (NASDAQ:MSFT) despite Bill Gates being the founder of the company. Another point to note is that Microsoft Corporation (NASDAQ:MSFT) is the only information technology company in Bill Gates’ top 10 stock picks. 

Baron Funds discussed Microsoft in their Q1, 2022 investor letter. Here is what they said:

“Microsoft (NASDAQ:MSFT) re-enters our portfolio after a long gap. MSFT sells enterprise and consumer software products as well as hardware products such as the Xbox video game console and Surface laptops. All business segments experienced double-digit revenue growth and earnings per share have compounded in the mid-double digits over the last 5 years. We believe MSFT continues this momentum in the years ahead.”

8. Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF)

Bill & Melinda Gates Foundation Trust’s Stake Value: $341 million

Percentage of Bill & Melinda Gates Foundation Trust’s Portfolio: 1.72%

Number of Hedge Fund Holders: 5

Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is a Mexico based beverage company. It is a subsidiary of FEMSA which has a 48% ownership stake in the company. 28% out of the rest of equity is owned by wholly owned subsidiaries of The Coca-Cola Company (NYSE:KO). 

Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) came up with a revenue of $2.50 billion in its Q1 results, beating estimates by $131 million. 

On May 3, Barclays analyst Benjamin Theurer upgraded Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) to Overweight from Equal Weight and set his price target at $62, up from $55. 

Theurer is of the view that the recent enhanced commercial relationship and economic alignment with The Coca-Cola Company (NYSE:KO) position Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) in a good spot to increase its wallet-share in core markets like Mexico and Brazil and offer leverage to enhance profits.

The 5 hedge funds invested in Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) as of the first quarter of 2022 held a total equity of $462 million, with $341 million held in shares by Bill & Melinda Gates Foundation Trust alone, making it the lead stakeholder in the company. 

7. Deere & Company (NYSE:DE)

Bill & Melinda Gates Foundation Trust’s Stake Value: $373.7 million

Percentage of Bill & Melinda Gates Foundation Trust’s Portfolio: 1.89%

Number of Hedge Fund Holders: 66

Deere & Company (NYSE:DE) is a heavy machinery manufacturer based in Illinois. The company manufactures and supplies agricultural and forestry machinery and diesel engines. Bill & Melinda Gates Foundation Trust holds 0.9 million shares in Deere & Company (NYSE:DE) as of the first quarter of 2022. 

On June 9, Cowen analyst Matt Elkott initiated coverage of Deere & Company (NYSE:DE) with a Market Perform rating with a price target of $396. Deere’s precision agriculture exposure is a “game-changing secular story” but there is still a cyclical and seasonal element to the company’s business that warrants a neutral rating, the analyst told investors in a research note. 

Elkott sees an incremental recurring revenue opportunity for Deere & Company (NYSE:DE) from new precision technologies for US cornfields. 

The stock has an annual dividend yield of 1.40% as of June 17. The shareholders of record on June 30 will be paid a dividend of $1.13 per share on August 8. Deere & Company (NYSE:DE) has been consecutively growing its dividend payouts for two years, indicating that the company does not yet have a strong track record for dividend growth.

Deere & Company (NYSE:DE) was mentioned in the Q1, 2022 investor letter of ClearBridge Investments. Here’s what they had to say:

“Industrials holding Deere (NYSE:DE) was also a strong contributor to performance during the quarter. Through its unmatched 5,000 dealer network across 160 countries, Deere is a major global player in agricultural, construction and forestry equipment, with a particularly dominant position in U.S. agriculture. Deere’s moat around its core equipment capabilities, coupled with years of substantial investments in technology and innovation, further extends its competitive advantage into precision agriculture, which allows for higher farm yields with lower use of fertilizers, pesticides and water, thereby improving farmers’ bottom lines while reducing their environmental footprint. In addition to drought conditions in Latin America, the war between Russia and Ukraine, two major exporters of corn and wheat, is further disrupting the global agricultural commodities market and pushing prices even higher. This should mean higher farmer revenues and greater demand for Deere’s equipment, which is further supported by some of the lowest levels of inventory of new and used equipment on record.”

6. Walmart Inc. (NYSE:WMT)

Bill & Melinda Gates Foundation Trust’s Stake Value: $450 million

Percentage of Bill & Melinda Gates Foundation Trust’s Portfolio: 2.27%

Number of Hedge Fund Holders: 60

Walmart Inc. (NYSE:WMT) operates retail superstores, discount stores and grocery stores across the United States. The company also maintains a strong e-commerce platform by the same name. It retails a wide variety of products including home improvement tools, apparel, consumer electronics and food.

Walmart Inc. (NYSE:WMT) is the largest corporation in the world by revenue but number sixth in Bill Gates’ latest stock portfolio. Walmart Inc. (NYSE:WMT) beat estimates in its Q1, 2022 results by $2.24 billion with a revenue of $140.29 billion but missed EPS consensus by $0.18. 

As of Q1, 2022, GQG Partners is the leading stakeholder in Walmart Inc. (NYSE:WMT) with an equity ownership of $2 billion. The total equity owned by 60 hedge funds invested in the company, amounts to $6.56 billion. 

On June 5, Baird analyst Peter Benedict noted that Friday’s annual stakeholders’ meeting marked a welcome return to in-person engagement with the senior leadership team of Walmart Inc. (NYSE:WMT). At 19-times near-term Earnings Per Share, Benedict likes Walmart’s blend of defensive short-term appeal and disruptive long-term optionality. The analyst kept an Outperform rating on the shares with a price target of $155. 

Walmart has an annual dividend yield of 1.89% as of June 17 and has been increasing the amount it pays out in dividends for 49 consecutive years.  It is one of the most prominent stocks in Bill Gates’ portfolio, alongside Berkshire Hathaway Inc. (NYSE:BRK-B), Caterpillar Inc. (NYSE:CAT) and Ecolab Inc. (NYSE:ECL).

Click to continue reading and see Bill Gates’ Latest Stock Portfolio: Top 5 Picks.

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Disclosure: none. Bill Gates Latest Portfolio: Top 10 Picks is originally published on Insider Monkey.

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