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Bill Gates' Foundation Buys Into the Morgan Stanley China A Share Fund

Trust gains increased exposure to Chinese stocks

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Graham Griffin
Sep 03, 2021

Summary

  • New position established in the Morgan Stanley China A Share Fund.
  • Purchase follows a previous new buy in July.
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The Bill and Melinda Gates Foundation Trust, founded by

Bill Gates (Trades, Portfolio) and his ex-wife Melinda in 2000, has revealed a new holding in Morgan Stanley China A Share Fund Inc. (CAF, Financial).

The Bill and Melinda Gates Foundation is the largest private foundation in the world. Six years after it was established, the group's trustees created a two-entity structure: the Foundation, which distributes money to grantees, and the Foundation Trust, which manages the group's endowment. The investments of the Foundation Trust are managed by an outside team of portfolio managers. The goal of the foundation is to distribute donations and income from investments in the form of grants to encourage and fund philanthropic business activity.

According to GuruFocus’ Real-Time Picks, a Premium feature, the new position was established on Aug. 23. Managers of the trust purchased 1.1 million shares that traded at an average price of $21 on the day of the purchase. Overall, the purchase had a 0.10% impact on the equity portfolio and GuruFocus estimates the total loss of the holding at 1.19% over the last several weeks.

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The Morgan Stanley China A Share Fund (

CAF, Financial) is a United States-based non-diversified, closed-end management investment fund. Its investment objective is to seek capital growth by investing a majority of its assets in A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges. Investments cover a wide variety of sectors, including aerospace and defense, banks, automobiles, household durables, media, pharmaceuticals and software.

On Sept. 3, the stock was trading at $20.75 per share with a market cap of $454.48 million. Due to the inconsistent availability of closed-end funds, there is not enough data available for a GF Value Line to be generated. The currently available shares are trading well below a peak value of $64.42 in 2007.

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GuruFocus gives the fund a financial strength rating of 5 out of 10 and a profitability rank of 2 out of 10. There are currently two severe warning signs issued for a low Piotroski F-Score and declining revenue per share. While the company has underperformed its comparative index inside of the last five years, it has maintained a good balance of returns on equity and its weighted average cost of capital since 2019.

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Portfolio overview

As of Sept. 3, the trust’s portfolio contained 17 stocks, including its two recent new buys. It was valued at $23.87 billion and has seen a turnover rate of 8%. Top holdings include Berkshire Hathaway Inc. (

BRK.B, Financial), Waste Management Inc. (WM, Financial), Caterpillar Inc. (CAT, Financial), Canadian National Railway Co. (CNI, Financial) and Walmart Inc. (WMT, Financial).

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The top represented sectors are financial services (50.87%), industrials (30.66%) and consumer defensive (5.87%).

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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