Top 5 Conviction Picks from Bill Gates
Gates left Harvard to devote his energies to Microsoft, a company he had begun in 1975 with his childhood friend Paul Allen. At that time he already believed that the computer would be a valuable tool on every office desktop and in every home, so they began developing software for personal computers.
In addition, Gates founded Corbis, which is developing one of the world's largest resources of visual information — a comprehensive digital archive of art and photography from public and private collections around the globe.
Bill Gates is considered one of the smartest businessmen across the world.
Here are some of his top picks:
Berkshire Hathaway (BRK.A): Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. The most important of these is the property and casualty insurance business conducted nationwide on a direct basis and worldwide on a reinsurance basis through a number of subsidiaries collectively referred to as the Berkshire Hathaway Insurance Group.
Berkshire remains one of the most financially sound companies with the firm managing its risk through diversification and a conservative capital position. Berkshire Hathaway's book value per share increased at a compound annual growth rate of 20.2% from 1965 to 2010. At the end of June 2011, Berkshire had $71 billion in float from its insurance operations. The firm's cost of float for the first six months of 2011, as represented by the ratio of its underwriting losses to average float, was about 2%.
All this allowed it to take full advantage of opportunities.
Caterpillar Inc. (CAT): Caterpillar is the world's largest manufacturer of heavy construction machinery such as bulldozers, excavators, and loaders and equipment for both surface and underground mines. Cat supports its machinery and engine revenue with a financial services arm, a logistics business, and remanufacturing service work. The company operates more than 100 manufacturing centers and works with nearly 200 dealers across the world.
Although demand has fallen worldwide, Cat's extensive national dealer network and reputation for quality are key competitive advantages.
M&T Bank Corp. (MTB): M&T Bank Corp is a bank holding company. They have two primary bank subsidiaries: Manufacturers and Traders Trust Company and M&T Bank, National Association. The banks collectively offer a wide range of commercial banking, trust and investment services to their customers.
M&T is in good financial health with tangible common equity/asset ratio of 10.7% as of June 30, 2011. Furthermore, the company is still paying a $0.70-per-share quarterly dividend.
The company's capital levels, earnings power, and its ability to reduce dividend payments minimize the possibility of a capital shortfall.
Comcast Corp A (CCS): Comcast is the largest operator in the cable industry. The firm's networks reach 52 million households, with 23 million customers signing up for basic cable service. The firm also offers Internet access and phone service. The five largest Comcast markets are Philadelphia, Chicago, San Francisco, Seattle, and Boston.
No other company can match Comcast's ability to offer multiple services over one connection within the territories it serves. Comcast's network should give it a platform to meet customer demands well into the future at modest incremental cost. In addition, the small- and medium-sized business services market should be a source of growth for Comcast for several years.
Cemex, S.A.B. de C.V. (CX): CEMEX is a leading global producer of cement, ready-mix concrete, and aggregates. In 2010, 34% of revenue was generated in Europe, 24% in Mexico, 18% in the U.S., 10% in the rest of the Americas, 7% in Africa and the Middle East, and 4% in Asia.
CEMEX has a strong position in emerging markets, where prospects for robust demand for building materials are much brighter. The global cement industry is fairly consolidated, especially in developed markets, which bodes well for producers.