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Michael Larson: Investment Manager to Bill Gates
Posted by: Frank Voisin (IP Logged)
Date: June 6, 2012 07:15AM
Bill Gates has described Warren Buffett as having the greatest impact on Gates of anyone outside Gates’ own family. Though he acknowledges this impact extends far beyond investing, for the purposes of this site, I’ll confine the discussion to Gates’ investments.
We all know how Gates became wealthy, but what many may not be aware of is that he has been shifting his wealth away from Microsoft (MSFT). Over the last five years, Gates reduced his ownership of MSFT from 957.5 million shares to 501 million shares. These sales have been occurring for a long time:
Quote:The reason? Gates is moving his capital into his personal investment vehicle Cascade Investment LLC.
What does Warren Buffett have to do with all of this? It turns out that Cascade is run by Michael Larson, a value investor who reportedly follows Buffett’s principles in investing on behalf of Gates (and, indirectly, Buffett himself, since Cascade manages the portfolio of the Bill and Melinda Gates Foundation which is the beneficiary of Buffett’s pledged largesse).
So what do we know about Larson? From this GlobeAdvisor article, we gain some insight into his background:
Quote:Like many value investors, he eschews publicity. His business cards reportedly do not list the company he works for, and he has traditionally avoided interviews. The most insight we can gain about Larson is from a wide ranging and in-depth Fortune interview he gave in 1999. Though some of the content is out of date, the details about Larson are valuable:
Quote:Unfortunately, unlike investment managers like Seth Klarman or Bruce Berkowitz, outsiders are never privy to Larson’s investment theses or general investment philosophy. All we can suss out of his interview is that he places a lot of emphasis on asset allocation and sector rotation. This would lead one to conclude that Larson is most likely to be invested in sector ETFs, but this is not the case since his portfolio holdings are focused on individual companies, like his most recent purchase of Diamond Foods (NASDAQ: DMND) which collapsed due to an accounting scandal. Until Larson decides to speak out about his investment process, the best we can do is track his moves and arrive at our own conclusions. You can see his portfolio holdings by tracking the 13F reports he is required to report with the SEC (Bill & Melinda Gates Foundation Trust filings here and Cascade Investment LLC filings here, or head to GuruFocus to see changes in positions all in one place, which I find handy).
What do you know about Michael Larson?
Author Disclosure: None
Guru Discussed: Bill Gates: Current Portfolio, Stock Picks
Stocks Discussed: MSFT,