Bill Gates’s personal portfolio is managed as Cascade Investments by seasoned money manager Michael Larson. In this overview, we shall cover Bill Gates's top holdings, his sector/industry distribution, and any new buys that he has made recently, as well as any other interesting investing commentary.
Bill Gates's Top Five Holdings Warren Buffett once said that Bill Gates can do what he does and he cannot do what Bill Gates does. However, when it comes to investing, both men have many things in common. Like Warren Buffett, Bill Gates’ portfolio is highly concentrated, even not counting all of the shares of Microsoft he owns. Cascade Investments, which doesn't include any Microsoft shares, has about 90% of its portfolio invested in just 5 stocks. They are Canadian National Railway Company (CNI), Republic Services Inc. (RSG), Fomento Economico Mexicano S.A.B. de C.V. (FMX), Berkshire Hathaway Inc. (BRK-A), and Grupo Televisa S.A. Global Depositary (TV), as shown in the table.
As the table shows, Bill Gates' $4.02 billion at Cascade Investments is 88.55% invested in just five stocks. Only 20 stocks make up the complete portfolio.
1. Canadian National Railway Company (CNI)
The largest holding, Canadian National Railway, is accounted for more than 30% of his portfolio. As of 3-31-09, he owned 34,809,544 shares of the company. Canadian National Railway Company is a Canadian corporation which operates the larger of Canada's two principal railroads and the only coast-to-coast railroad network in North America.
The company has a market cap of $19.38 billion, a P/E ratio of 12.2 and a P/S ratio of 2.7. The dividend yield of Canadian National Railway Company Fully stocks is 2.4%. Bill Gates started buying Canadian National Railway Company back in 2002, at around $12.45 per share (split adjusted). Since then, the stock has almost tripled. He has made about $1 billion from the stock, its value growing from about $378 million to $1.23 billion. Throughout Gates' history with CNI, the stock has trade from about $12 to $57 dollars. However, since the recession, the stocks has fell from its high of $57. Currently, the stock trades at around $41 to $42 per share. Gates' has not bought or sold any shares since the fourth quarter of 2007.
Warren Buffett and Bill Gates both have similarities in their investment style. Both are buy-and-hold investors, both have highly concentrated portfolios (Warren Buffett's top five holdings make up about 60% of his portfolio), and both seem to find railroad companies attractive. We mentioned that Warren Buffett has learned many investing strategies from Bill Gates; well, this is a one example. Charlie Munger stated in an annual shareholder meeting that it was Bill Gates's CNI that convinced Warren to invest in what is now one of his most well known and also his second top holding: Burlington Northern Santa Fe Corp (BNI). In fact, Warren Buffett hadn't liked any railway companies, but Canadian National Railway convinced him otherwise. BNI accounts for about 11.3% of Warren Buffett’s portfolio. His top holding is The CocaCola Company (KO), which is over 20% of his portfolio.
|Stock Symbol||Stock Name||Share Price ( Split Adjusted)||Price Change Since First Bought||Number of Shares||Total Value||Percentage in Portfolio|
|CNI||Canadian National Railway Company||$35.45||185%||34,809,544||$1,233,998||31.93%|
|RSG||Republic Services Inc.||$17.15||37%||55,404,169||$950,181||24.58%|
|FMX||Fomento Economico Mexicano S.A.B. de C.V.||$25.21||(34%)||2,2516,795||$567,648||15.69%|
|BRK-A||Berkshire Hathaway Inc||$86,700||0%||4,050||$351,135||9.08%|
|TV||Grupo Televisa S.A. Global Depositary||$13.64||49%||20,680,400||$282,081||7.3%|
2. Republic Services Inc. (RSG)
Bill Gates' second largest holding is Republic Services Inc. RSG is about 25% of his portfolio. As of the first quarter of 2009, Bill Gates' owned 55,404,169 shares of the company. Republic Services Inc. is a provider of services in the domestic non-hazardous solid waste industry. They provide non-hazardous solid waste collection services for commercial industrial, municipal and residential customers through their collection companies. They also own or operate transfer stations and solid waste landfills.
The company has a market cap of $8.18 billion; its shares were traded at around $21.6 with a P/E ratio of 12.6 and P/S ratio of 2.2. The dividend yield of Republic Services Inc. stocks is 3.6%. Replic Services is also a five-star rated company by GuruFocus.com.
The company had an annual average growth of about 11.6% over the past ten years. Like Canadian National Railway, Bill Gates started buying RSG in 2002, the same quarter that he bought CNI, at around $12.53 per share. These two are both two of his original holdings of Cascade. The stock has increased about 37% since then, although it once reached the point of nearly tripling. This is another pattern that can be observed with CNI. CNI reached its high the same quarter that RSG did: in the third quarter of 2007, just before the start of the recession.
Throughout the recession, the stock has lost about $11, and now trades at around $21. 54. The total value of all Gates' shares in the company reaches about 1.19 billion. Cascade Investments has recently been reported that they have been increasing their position in the company throughout the first and second quarters of 2009. On Feb. 23rd, 2009, the company bought 500,000 shares of the company at the average price of $23.18. The next day, the stock fell again, and Cascade bought 500,000 more shares of the company at the average price of $22.60. Cascade then bought 731,700 shares of the company on March 2nd at the average price of $18.80, then 430,000 more shares on March 3rd at the average oruce if $19.23. It may soon be that Repuclic Services is Gates' top holding, instead of Canadian National Railway.
3. Fomento Economico Mexicano S.A.B. de C.V. (FMX)
Gates' third top holding is Fomento Economic Mexicano S.A.B. de C.V. (FMX). This is one of Gates' new holdings; he started buying the stock in 2007. FMX accounts for about 16% of his portfolio. FOMENTO ECO-ADR is Latin America's largest beverage company exporting to the United States Canada and select countries in Europe Asia and Latin America. They are strategically comprised of and operates by means of the following subsidiaries: FEMSA Cerveza Coca-Cola FEMSA the largest bottler for The Coca-Cola Co. in Latin America and the Strategic Businesses Division which groups the packaging retail and logistics operations whose main objective is to offer competitive advantages to the beverage subsidiaries.
Fomento Economico Mexicano S.A.B. de C.V has a market cap of $11.67 billion; its shares were traded at around $32.58 with and P/S ratio of 0.76. The dividend yield of Fomento Economico Mexicano S.A.B. de C.V stocks is 0.51%. Fomento Economico Mexicano S.A.B. de C.V had an annual average earning growth of 46.5% over the past 10 years. Bill Gates started buying FMX in the fourth quarter of 2007. He bought 10,810,000 shares at the average price of around $38.17. The total value of his original purchase was about $413 million. Currently, the stock trades at about $32 per share. Since Gates bought the company, it has risen to $45 in the middle of 2008, then plunged down to its current prices. The stock has fallen steadily since the second quarter 2008.
4. Berkshire Hathaway Inc. (BRK-A)
Bill Gates' fourth top holding is Berkshire Hathaway. About 9% of his portfolio is invested in the company. He owns 4,050 shares of Class-A common shares of the company. Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in a number of diverse business activities. The most important of these are insurance businesses conducted nationwide on a primary basis and worldwide on a reinsurance basis. Berkshire also owns and operates a number of other businesses engaged in a variety of activities as identified herein.
Berkshire Hathaway Inc. has a market cap of $97.93 billion; its shares were traded at around $89925 with a P/E ratio of 17.8 and P/S ratio of 0.9. Berkshire Hathaway Inc. had an annual average earning growth of 27.1% over the past 10 years. GuruFocus rated Berkshire Hathaway Inc. the business predictability rank of 3.5-star.
Bill Gates' started buy Berkshire back in 2005. He bought 3,580 shares at an average price of $87,000, or for about $311 million dollars. Since then, the price of the stock has shot up to $130,000 and above, and currently the stock is trading at $89,200.The recession seems to have affected Berkshire the same way it has affected Bill Gates' other stocks, although it was not until the middle of 2008 until Berkshire started dropping. The recession caused Berkshire to lose about a third of its value. Bill Gates currently sits on the Board of Directors for Berkshire Hathaway. A longtime friend of Warren's, he replaced Susan Buffett when she died in 2004. Recently, it was also announced that Gates' made a lifetime pledge to Berkshire Hathaway, saying his goal is to protect the company's culture and values after Buffett steps down from his position in the company. Warren Buffett and Bill Gates both said that they have a very important goal of making Berkshire "not just great now, but great forever." Berkshire Hathaway is the only outside company that Bill Gates is a director of.
5. Grupo Televisa S.A. Global Depositary (TV)
Bill Gates' number five holding is Grupo Televisa S.A. Global Depositary (TV). Grupo Televisa S.A is the largest media company in the Spanish-speaking world and a major player in the international entertainment business. They have interests in Television production broadcasting international distribution of television programming direct-to-home satellite services publishing music recording radio production and broadcasting cable television professional sports and show business promotions paging services feature film production and distribution and dubbing. with a P/E ratio of 437.25. The dividend yield of Grupo Televisa S.A. Global Depositary stocks is 2.07%. Grupo Televisa S.A. Global Depositary had an annual average earning growth of 12.3% over the past 10 years. GuruFocus rated Grupo Televisa S.A. Global Depositary the business predictability rank of 3-star.
Grupo Televisa S.A. Global Depositary accounts for 7.3% of Bill Gates' portfolio. He started buying the stock in 2002, at around $9 per share. He bought 19,439,200 shares of the company originally. Today, he has 20,680,400 shares of the company. Currently, the stock trades at around $17 to $18 per share. The value of all his shares has grown from $178 million to $362 million. Since Gates started buying the company, the stock has traded $9 to $27 per share. It was also recently reported that Gates recently increased his position in the company by 2.48%. His money manager of his fund, Michael Larson, also joined TV's board of directors. Gates owns 3.4% of all A shares of the company, and 6.4% of all B shares, according to a recent filing. He also recently bought an additional 1.1 million shares of the company, according to the SEC.
Bill Gates' Sector/Industry Weightings
Bill Gates' industry weightings are also highly concentrated. As shown from the table above, over 97% of all his stocks lie in just 6 industries. However, one thing that is surprising is that he doesn't own any other technology companies besides Microsoft. Perhaps he thinks that no other technology company is good enough for him to invest in. You can see Bill Gates' full list of Sector/Industry weightings here:
|Industry Name||Quarter Ended 2008-12-31||Quarter Ended 2009-03-31|
Past Casualties and Companies Owned
Bill Gates is a buy and hold investor, meaning that he rarely sell stocks. However, he has lost a lot of money on some stocks, such as Six Flags and ICOS Corp. Here we will review his transactions with these companies, along with any other interesting commentary.
Six Flags (SIXF.OB)
Bill Gates is a long time owner of six flags, and still owns it today. However, the company is in great financial difficulty and suffered many crises throughout its history. The company was started in 1961, and was successful for a while. Since 1998, Six Flags has posted negative financial data for each consecutive quarter. The company has over $2 billion in debt, which is, some analysts say, caused by over-expansion and mis-management. Starting in 2004, the company started selling off its property in hopes to relieve some of its debt. The company also sold off its European chains.
In 2005, Bill Gates, who owns about 11% of the company, demanded change in the way the company was run. Throughout 2006 and 2007, the company constantly sold off its parks in order to try and make some money and pay down the debt. In October 2008, Six Flags was warned that its stock price had fallen too low to be listed on the New York Stock Exchange. The company was also believed to have been to be unable to make a payment to preferred stockholders due in August 2009. On April 20th, 2009, Six Flags was delisted from the NYSE. Bill Gates' owns about 10 million shares of Six Flags today.
ICOS was a company that Bill Gates used to own. The company was bought by Eli Lilly and company in 2007. After being acquired, the company was dissolved. Before being bought by Eli Lilly, ICOS was the largest biotechnology company in Washington State. Bill Gates was the top shareholder of the company, owning about 10% of the company's equity. ICOS Corp was a drug development company that discovers and develops new pharmaceuticals by seeking points of intervention in disease processes that may lead to more specific and efficacious drugs. The company operated primarily by establishing corporate collaborations with other pharmaceutical companies, rather than developing and manufacturing drugs exclusively on its own.
Bill Gates is a very concentrated investor, like Warren Buffett. He has low turnovers and usually holds the companies that he owns for many years. He is also highly concentrated in his sector/industry weightings. The top six industries that he invests in make up over 97% of his portfolio at Cascade Investments. Gates is also very devoted to Berkshire Hathaway, and has made a lifelong commitment to the company.