Guru and Microsoft mogul Bill Gates (Trades, Portfolio) is once again the richest person in the world according to the Bloomberg Billionaires Index, which tracks the 300 wealthiest people across the world. Gates saw success in various parts of his life which ultimately added $15.8 billion to give him a massive $78.5 billion fortune.
Gates saw great success coming from his company Microsoft where he holds about 4.3% of the company and where shares alone jumped 40%. But other than his own company Gates saw notable success in his various investments such as Canadian National Railway which rose 34% this year and Ecolab which has gained 45% over the past year. His recent successes boost him above the previous richest person, a Mexican investor named Carlos Slim.
Most of Gates assets are held in Cascade Investment LLC, the entity through which Gates holds on to approximately three dozen publicly traded companies as well as several closely held businesses including the Four Seasons Hotels and Resorts and Corbis Corp.
In looking at his wealth, Gates holds less than a quarter of his fortune in Microsoft, and he’s donated over $28 billion to his Bill & Melinda Gates Foundation which is his charity which focuses on “discovering and disseminating innovative approaches to addressing extreme poverty and poor health in developing countries and improving the U.S. education system.”
While Gates hasn’t discussed his successes over the past year, he had plenty to say about the status of the world in 2013 and what’s to come in 2014. The philanthropist guru said in his blog thegatesnotes.com that he would be “publishing my [Gate’s] sixth annual letter in January. This time I’m planning to take a slightly different tack from years past—Melinda and I will be tackling some of the biggest myths we encounter in our work on health and poverty.” When he releases his letter, you can have it e-mailed to you here.
In response to Gates’ great year, here are a few of his highest earners (excluding his ownership in Microsoft) throughout 2013. GuruFocus tracks Bill Gates (Trades, Portfolio)’ Bill & Melinda Gates Foundation Trust portfolio which as of the third quarter held on to 22 stocks valued at nearly $20 billion. During the third quarter the fund added one new company (APD) to their holdings.
Berkshire Hathaway (BRK.B)
Berkshire Hathaway was Bill Gates (Trades, Portfolio)’ largest holding as of the close of the third quarter. The guru held 50.8% of the Bill & Melinda Gates Foundation’s portfolio in Warren Buffett (Trades, Portfolio)’s company. As of the third quarter the guru held on to a total of 87,039,804 shares, representing 3.72% of the company’s shares outstanding.
Over the third quarter, Gates upped his position in the company by 16.7% by purchasing 12,458,431 additional shares.
Gates’ historical holding history of Berkshire Hathaway as of the close of the third quarter:
Bill Gates (Trades, Portfolio) and Warren Buffett (Trades, Portfolio) have maintained a strong friendship and mutual respect for many years. Gates has been an independent director for Berkshire Hathaway since 2004.
Berkshire Hathaway is a conglomerate holding company owning subsidiaries engaged in a number of business activities, including property and casualty insurance and reinsurance, utilities and energy, finance, manufacturing, service and retailing.
Berkshire Hathaway’s historical revenue and net income:
The analysis on Berkshire Hathaway reports that the company’s price is near a 10-year high, it has shown predictable revenue and earnings growth and its operating margin is expanding.
Berkshire Hathaway recently announced that it would be acquiring Phillips Specialty Products Inc. (PSPI), which is a flow improver business from Phillips 66.
“Berkshire Hathaway made a strong offer for our high-performing flow improver business,” said Greg Garland, CEO of Phillips 66. “This transaction optimizes our portfolio and focuses growth on our midstream and chemicals businesses.”
The Peter Lynch Chart suggests that the company is currently undervalued:
Berkshire Hathaway has a market cap of $274.79 billion. Its shares are currently trading at around $117.57 with a P/E ratio of 14.60, a P/S ratio of 1.54 and a P/B ratio of 1.30. Berkshire Hathaway had an annual average earnings growth of 6.80% over the past ten years.
GuruFocus rated Berkshire Hathaway the business predictability rank of 2.5-star.
Some of Gates’ other holdings such as Ecolab Inc and Canadian National Railway saw huge rallies of 45% and 34% respectively. These two also helped Gates’ reclaim the title of World’s Richest Person.
As of the third quarter Gates holds on to 4,366,425 shares of Ecolab, representing 2.2% of his total portfolio and 1.45% of the company’s shares outstanding. The guru hasn’t altered his position in the company since the first quarter of 2011, and since his last increase the price per share has seen average gains of 108%.
Ecolab has been one of Gates’ strongest holdings, increasing 119.6% from his first buy in 2010. Along with his Bill and Melinda Gates Foundation portfolio, the guru also holds an additional 27.9 billion shares of Ecolab through his asset management business, Cascade Investments.
Ecolab develops and markets premium programs, products and services for the hospitality, foodservice, healthcare, industrial and energy markets. Its six reportable segments are U.S. Cleaning & Sanitizing; U.S. Other Services; International Cleaning, Sanitizing & Other Services; Global Water; Global Paper; and Global Energy.
Ecolab’s historical revenue and net income:
The analysis on the company reports that they have issued $3 billion of debt over the past three years, its asset growth is faster than its revenue growth and its dividend yield is near a 10-year low. The analysis has also noted that the company has shown predictable revenue and earnings growth, its price is near a 10-year high and its P/E and P/S ratios are trading at historical highs.
On Dec. 5, the company increased their quarterly cash dividend by 20%. This increase bumped the dividend up to $0.275 per share to be paid to shareholders on Jan. 15, 2014. This marks the 77th consecutive dividend for the company.
The company also recently announced a new product, Genesys, which are a new line of plastic surgical drapes and waste bags that use technology that speeds breakdown of the material into primary organic matter when disposed of in biologically active landfills.
Ecolab has a market cap of $30.87 billion. Its shares are currently trading at around $102.44 with a P/E ratio of 34.40, a P/S ratio of 2.50 and a P/B ratio of 4.60. The dividend yield for Ecolab stocks is presently at 0.90%, and the company had an annual average earnings growth of 8.40% over the past ten years.
GuruFocus rated Ecolab the business predictability rank of 5-star.
Canadian National Railway (CNI)
Another one of Gates’ notable investments is in Canadian National Railway where he held on to 17,126,874 shares of the company’s stock as of the close of the third quarter. The guru has maintained this exact position since the third quarter of 2010, and since then the price of the stock has jumped up 80%.
Gates’ position in the company makes up for 4.5% of his Bill & Melinda Gates portfolio as well as for 2.04% of the company’s shares outstanding.
Gates’ historical holding history as of the third quarter:
Canadian National Railway, together with its wholly-owned subsidiaries, is engaged in the rail and related transportation business. The company's network of approximately 20,100 route miles spans Canada and mid-America, connecting three coasts: the Atlantic, the Pacific and the Gulf of Mexico.
Canadian National Railway’s historical revenue and net income:
The analysis on CNI reports that the company’s dividend yield is nearing a 5-year low, its price is at a 10-year high and that it has issued CAD868.22 million of debt over the past three years. It also notes that the company has shown predictable revenue and earnings growth and that its operating margin is expanding.
The Peter Lynch Chart suggests that the company is currently overvalued:
Zack’s Industry Outlook recently published that their analysts expect Canadian National’s earnings growth to be at 10.75% for the fourth quarter. The company was also recently upgraded to “outperform” by investment analysts at Raymond Jones.
There are five guru shareholders of Canadian National Railway with Gates being the largest. Other guru owners include Jim Simons (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Steven Cohen (Trades, Portfolio).
Canadian National Railway has a market cap of $46.31 billion. Its shares are currently trading at around $55.62 with a P/E ratio of 19.70, a P/S ratio of 5.00 and a P/B ratio of 2.20. The dividend yield of Canadian National stocks is at 1.50% and the company had an annual average earnings growth of 10.60% over the past ten years.
GuruFocus rated Canadian National Railway the business predictability rank of 4-star.