When it comes to billionaire investors, Bill Gates is a pretty well-known name. He made his fortune as CEO of Microsoft (NASDAQ:MSFT), the software company he co-founded. Gates is worth an estimated $127.7 billion (as of this writing), according to Forbes, making him the eighth-richest person in the world.
After leading Microsoft for 25 years, Gates turned his attention to philanthropic projects. He joined Warren Buffett in signing The Giving Pledge, agreeing to give “virtually all” of his wealth to charitable causes. To support these goals, he created the Bill & Melinda Gates Foundation “to create a world where every person has the opportunity to live a healthy, productive life.” The foundation has disbursed $53.8 billion over the past 24 years, “to tackle the toughest and biggest problems.”
Due to Gates’ regular inflows of wealth, dividend payments, and outflows to charitable enterprises, the trust’s stock holdings and their amounts change regularly. Although the portfolio holds stakes in two dozen companies in total, the vast majority is held in just four stocks.
1. Microsoft: 33%
It’s no surprise that Microsoft stock tops the list since Gates is donating a portion of his shares to the trust. The Gates Foundation owns more than 38.2 million shares of Microsoft stock worth $15.45 billion.
Yet Microsoft has changed dramatically since Gates led the company. Current CEO Satya Nadella has taken the company forcefully into the 21st century, first shifting its strategy to the cloud and then rapidly adopting it. artificial intelligence (AI)preparing the company for future success.
At the end of last year, Microsoft Azure was the world’s second-largest cloud infrastructure provider with 26% of the market and was the fastest growing among its “big three” cloud competitors. While Azure grew its revenue 30% year-over-year during the fourth calendar quarter, Amazon Web Services (AWS) and AlphabetGoogle’s Google Cloud grew by 13% and 26%, respectively. Additionally, Microsoft’s total cloud revenue increased 24% year-over-year to $33.7 billion, representing 54% of Microsoft’s total revenue.
The company’s evolution towards generative AI has given rise to Microsoft Copilot, a suite of digital assistants deeply integrated with Microsoft products and services and designed to increase worker productivity. AI also has a halo effect on its cloud, and in the last quarter, six points of Azure’s growth were attributed to AI services. Analysts at Evercore ISI estimate that the company’s AI strategy could generate additional revenue of $143 billion by 2027.
Microsoft has paid a dividend every year since 2004 and has increased its payout in each of the past 14 years. Its yield of just 0.71% is boosted by a stock price that has risen 225% over the past five years, more than triple the stock’s 72% gains. S&P500. And with a payout ratio of only 25%, it’s highly likely that its dividend will continue to increase in the years to come.
2. Berkshire Hathaway: 17%
Warren Buffett promised that over time he would donate his vast mountain of Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) his actions – and the rest of his wealth – to charity. Between 2006 and 2022, his contributions to the Gates Foundation Trust climbed to $36 billion. Currently, the trust owns 19.9 million Berkshire shares, worth nearly $7.96 billion.
Rather than immediately converting the shares into cash, the foundation chose to hold the shares, which are backed by more than three dozen securities and 67 affiliates. In 2023, this conglomerate generated revenue of $364 billion, an increase of 20% year-over-year, resulting in net profit of $97 billion and a operating cash flow of $49 billion, a remarkable achievement considering the extent of its vast holdings.
Its collection of insurance companies, which include National Indemnity, GEICO, General Re, Berkshire Hathaway Reinsurance and Alleghany, are the crown jewels of Berkshire’s holdings. The company’s letter to shareholders noted that these businesses “performed exceptionally well last year, setting records in terms of sales, floats and underwriting profits,” and ultimately accounting for 40% of its $37 billion in revenue. Operating profit.
These factors help explain why Berkshire Hathaway continues to be among Gates’ largest holdings.
3. Waste management: 16%
Buffett is also a fan of boring, low-key businesses with recurring business models – which is likely something he passed on to Gates. This is certainly an appropriate definition of waste collection. This is likely why the trust owns approximately 35.2 million shares of Waste Management (NYSE:WM) shares, currently worth more than $7.23 billion.
Collecting trash and recycling certainly isn’t exciting, but the recurring nature of the service generates predictable revenue, which won’t change anytime soon. Waste Management is expanding beyond its humble roots, harvesting landfill gas, which is…
