Billionaires are not necessarily perfect investors, but as a group most have a very high batting average. That’s why there’s a certain amount of logic in studying what they buy and sell and to an extent following their lead. This is true only up to a point because most of us are in very different circumstances, so what’s good for them is not necessarily good for us.
Last week we updated readers about the market activities of Warren Buffett, one of the most successful investors ever. This week we’re turning our attention to another great investor: Bill Gates.
Like Buffett, Gates has a long brag sheet, and the following are only a few entries on the list. He became a billionaire in 1987 at age 23, the youngest person to do so. Twelve years later he became the first person to amass $100 billion, an unheard-of amount of money for an individual at the time.
Gates became fascinated by PCs and the software they use when these technologies began emerging. He decided to drop out of Harvard to become part of the software revolution. Arguably, he has done more to make PCs and related products an essential part of our lives than anyone else.
According to Financial Express, Gates and then-wife Melinda, established a charitable foundation in 2000 called the Bill and Melinda Gates Foundation Trust. Its objective is to enhance healthcare and reduce poverty around the world. In the 25 years since, Gates has donated a great deal to the Trust. He said he plans on donating all of his assets to charity during his lifetime.
Warren Buffett has also been a donor to the Trust since 2006 and served as a trustee until 2021. On a somewhat related note, it’s been suggested that Gates may have influenced how the trust invests its funds.
According to Yahoo Finance, the Trust was very recently valued at approximately $48 billion but, of particular interest to investors, is that more than two thirds of those funds – 69% – were invested in just three stocks. None of them is a “moon shot.” Rather, they have established businesses, are highly regarded in their fields, and have solid finances.
Paid Off Big Time
Gates donated $20 billion to his Foundation in 2022 and a large part of that was shares of Microsoft, the company he co-founded with Paul Allen. Philanthropy News Digest reports that people who follow Gates’ giving closely estimate that he has transferred some seven hundred million shares of Microsoft to the Gates Foundation” over the years, reducing his stake from 24% in 1996 to 1.3% currently.
The Street estimated his net worth at $126.8 billion, making him one of the richest people in the world. Microsoft still accounts for much of his wealth, but these days, his investments also include other high techs, biotechs, farmland, waste management, Berkshire, AI, and more.
The Trust still has nearly 35 million shares of Microsoft stock in its portfolio, which had a recent market value of $14.8 billion. Holding these shares, as opposed to trading them, has worked out very well for the Trust, for Gates and for other shareholders as the stock has increased by more than 60% since July 2022. Microsoft is the Trust’s largest holding and represents 31% of its investments.
What’s The Secret?
Analysts credit Microsoft’s long-established businesses for its strong growth, but there’s more to this story as newer ventures also are paying off big time.
According to Yahoo Finance, “Microsoft’s strong performance over the last two years can be attributed to its role in the growth of generative artificial intelligence. The company increased its investment in generative AI leader OpenAI in early 2023 and it became a top cloud computing platform for AI developers as a result of its close ties with (Microsoft). Microsoft’s cloud platform, Azure, saw AI customers grow nearly 60% year over year in its most recent quarter.”
Microsoft is also adding AI capabilities into its Copilot software and gaining more customers in the process. 77,000 firms already use this “To improve productivity and creativity across Github, Office and other applications,” says Yahoo.
Microsoft’s shares recently had a P/E of 32. Some believe that’s hefty – and it is a premium to the S&P 500. However, Yahoo says that the company’s leading position in cloud computing for AI developers, combined with the massive enterprise software customer base which can sell Copilot, “gives it a long runway for growth.” Microsoft has a strong cash position that will enable it to take advantage of opportunities that come its way.
Dynamic Duo
The Trust’s second largest holding is Berkshire Hathaway “B” shares, which represent approximately 23% of its assets. Buffett recently donated 9.9 million of these shares to the Trust. Its position, now nearly 25 million shares, were recently valued at approximately $11.2 billion.
Berkshire’s stock has also been a top performer in 2024 – it’s up about 26% so far this year. According to Yahoo, “Around 60% of its value is tied to its cash and equities, while the other 40% is tied to its wholly-owned businesses including insurance operations and railroads.” Yahoo adds that although the book value of the “B” shares appears expensive, “It may be worth the premium valuation because those assets could drive significantly better returns in the future.”
The Trust’s third largest holding is Waste Management, the leading waste hauler in the U.S. Although this industry lacks the glamour and excitement of high-tech, it is appealing in other ways such as steady demand. The Trust has more than 35 million shares of Waste Management, which had a recent value of some $7.3 billion.
Waste Management’s stock was doing well in 2024 but second-quarter numbers have disappointed investors. However, according to Yahoo, “The long-term outlook for the business remains strong and the near term doesn’t look too bad either.” Waste Management raised its full-year guidance.
Waste Management owns more landfills than its competitors and does business in high-density routes, which means it can serve customers efficiently. This gives the company pricing power and free cash flow that enable it to grow via acquisitions if such opportunities become available; the most recent acquisition is set to close in the fourth quarter. According to Yahoo Finance, considering Waste Management’s corporate strengths “it should be able to outperform at this price.” Waste Management makes up 15% of the Trust’s assets.
The Trust has been a strong performer recently, but that’s not to say it won’t be impacted by a very sharp plunge on Wall Street, should one occur. If the past is any indication of the future, shareholders may be rewarded handsomely over the long term.
Sources: bloomberg.com; financialexpress.com; marketwatch.com; philanthropynewsdigest.com; yahoofinance.com
Gerald Harris is a financial and feature writer. Gerald can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.
