The Bill & Melinda Gates Foundation Trust, founded in 2000 by Bill Gates (Trades, Portfolio) and his ex-wife Melinda, disclosed in regulatory portfolio filings that its top five trades during the third quarter included new buys in Microsoft Corp. (MSFT, Financial), Kansas City Southern (KSU, Financial) and Deere & Co. (DE, Financial) as well as reductions to its holdings in Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) and United Parcel Service Inc. (UPS, Financial).
Managed by a team of outside investors, the foundation trust invests in companies consistent with the principles of good governance and management. The investment managers also consider issues beyond corporate profits; additionally, the trust does not invest in companies whose profit model is tied to corporate activities not in line with the trust’s principles.
As of Sept. 30, the trust’s $23.87 billion equity portfolio contains 15 stocks with a turnover ratio of 8%. The top two sectors in terms of weight are financial services and industrials, representing 45.53% and 33.79% of the equity portfolio.
Microsoft
The trust purchased 2,937,703 shares of Microsoft (MSFT, Financial), giving the stake 3.57% weight in the equity portfolio.
Shares of Microsoft averaged $290.90 during the third quarter; the stock is significantly overvalued based on Tuesday’s price-to-GF Value ratio of 1.36.
GuruFocus ranks the Redmond, Washington-based software giant’s profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and an operating margin that has increased approximately 6.9% per year on average over the past five years and outperforms over 96% of global competitors.
Gurus with holdings in Microsoft include Ken Fisher (Trades, Portfolio)’s Fisher Investments, Pioneer Investments and PRIMECAP Management (Trades, Portfolio).
Kansas City Southern
The trust purchased 2.19 million shares of Kansas City Southern (KSU, Financial), allocating 2.56% of its portfolio to the stake. Shares averaged $278.75 during the third quarter; the stock is significantly overvalued based on Tuesday’s price-to-GF Value ratio of 1.76.
GuruFocus ranks the Kansas City-based railroad company’s financial strength 4 out of 10 on the back of debt ratios that are underperforming more than 64% of global competitors despite having a high Piotroski F-score of 7 and a strong Altman Z-score of 3.41.
Deere
The trust purchased 1,033,598 shares of Deere (DE, Financial), giving the position 1.49% of equity portfolio space. Shares averaged $360.66 during the third quarter; the stock is significantly overvalued based on Tuesday’s price-to-GF Value ratio of 1.93.
GuruFocus ranks the Moline, Illinois-based agricultural machinery company’s profitability 8 out of 10 on several positive investing signs, which include a 3.5-star business predictability rank, a high Piotroski F-score of 8 and an operating margin that has increased approximately 4.5% per year on average over the past five years and is outperforming more than 89% of global competitors.
Berkshire
The trust sold 5 million Class B shares of Berkshire (BRK.B, Financial), trimming 11.45% of the position and 5.82% of its equity portfolio.
Class B shares of Warren Buffett (Trades, Portfolio)’s insurance conglomerate averaged $280.85 during the third quarter; the stock is fairly valued based on Tuesday’s price-to-GF Value ratio of 1.07.
GuruFocus ranks the Omaha, Nebraska-based insurance conglomerate’s profitability 7 out of 10 on several positive investing signs, which include a four-star business predictability rank, a high Piotroski F-score of 8 and a net profit margin that outperforms over 88% of global competitors.
United Parcel Service
The trust sold 517,775 shares of United Parcel Service (UPS, Financial), slicing 18.48% of the holding and 0.45% of its equity portfolio.
Shares of UPS averaged $197.60 during the third quarter; the stock is significantly overvalued based on Tuesday’s price-to-GF Value ratio of 1.39.
GuruFocus ranks the Atlanta-based logistics company’s profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 and an operating margin that outperforms more than 70% of global competitors.
