The Bill & Melinda Gates Foundation, one of the world’s most influential philanthropic organizations, has built a $44 billion investment portfolio, with a significant portion invested in just three stocks. Despite being associated with tech, some of the foundation’s largest holdings may surprise you.
- Microsoft (29%) - A Long-Term Investment
It’s no surprise that Microsoft, the company co-founded by Bill Gates, is the largest holding in his foundation’s trust. Although Microsoft didn’t appear in the foundation's portfolio between 2002 and 2017, Gates resumed his donations in 2017, significantly increasing the trust’s stake in the tech giant. As of September 2022, the trust owned nearly 29 million Microsoft shares, valued at around $12.5 billion.
The trust recently began selling off a portion of its Microsoft holdings, having reduced its stake by 26% over the last four quarters. Despite these sales, Microsoft’s stock has surged more than 60% since Gates’ last donation in July 2022, driven by its leadership in artificial intelligence (AI).
Key highlights of Microsoft's growth:
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Generative AI: Microsoft has made significant investments in OpenAI, the creator of ChatGPT, positioning itself as a leader in cloud computing and AI software.
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Azure Growth: The company's Azure cloud computing division continues to perform well, with a 33% growth rate in its latest quarter.
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Enterprise Software & Copilot AI: Microsoft’s dominant position in productivity software and its growing Copilot AI services is rapidly increasing adoption across businesses globally.
Currently, Microsoft shares are trading at 33 times forward earnings, a premium price reflecting its strong growth prospects in both AI and cloud services.
- Berkshire Hathaway (23%) - Warren Buffett’s Legacy
Billionaire Warren Buffett has contributed Berkshire Hathaway stock to the Gates Foundation every year since 2006, further solidifying its place as one of the foundation’s largest holdings. At the end of the third quarter, the foundation held approximately 22 million shares of Berkshire Hathaway Class B, valued at around $10 billion.
Berkshire Hathaway’s business model, which includes an expansive investment portfolio and a significant cash reserve, has fueled its long-term growth. The company’s equities are valued at about $300 billion, and it holds around $325 billion in cash and Treasury bills.
Key insights into Berkshire Hathaway’s performance:
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Strong Operating Income: In 2024, the company saw a 17% year-over-year increase in operating income.
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Cash Reserves: Berkshire’s vast cash holdings, alongside its robust core operations, provide it with significant flexibility for growth or market corrections.
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Stock Valuation: Shares are trading at approximately 1.6 times book value, a slight premium, but still reasonable given the company’s financial strength.
Despite concerns about valuations, especially with some of its top holdings, Berkshire Hathaway remains a core asset for the Gates Foundation.
- Waste Management (15%) - A Steady Performer
Waste Management, a leader in waste disposal, has been a consistent performer in the Gates Foundation’s portfolio. As of September, the foundation held 32.2 million shares, valued at approximately $6.5 billion. This position has been built over years of continued investment, with the foundation only selling a small number of shares over time.
Key factors behind Waste Management's success:
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Market Leadership: The company’s dominance in landfill holdings makes it a stable player in the waste disposal market. With regulatory challenges for new landfills, it faces limited competition.
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Pricing Power: Waste Management has demonstrated its ability to raise prices to outpace inflation, ensuring continued profitability.
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Acquisitions: The company has been active in acquiring related businesses, such as medical waste management, to bolster its position.
Waste Management's strong performance is evident in its recent 11% growth in earnings before interest, taxes, depreciation, and amortization (EBITDA), as well as its commitment to a 10% dividend increase in December. Trading at a fair price with a robust outlook for 2025 and beyond, this stock continues to be a cornerstone of the Gates Foundation's trust.
A Strategic and Diversified Portfolio
While the Bill & Melinda Gates Foundation’s trust is heavily concentrated in just three stocks—Microsoft, Berkshire Hathaway, and Waste Management—the diversity of sectors (technology, finance, and waste management) showcases Bill Gates’ strategic approach to wealth management. This balanced mix of high-growth tech investments and reliable, stable stocks provides both long-term growth and a foundation for philanthropy.
With inputs from agencies
Image Source: Multiple agencies
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