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Gates' Trust Buys Microsoft, Slims Buffett's Berkshire in 3rd Quarter

Foundation trust takes a stake in company Gates co-founded in 1975

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Nov 16, 2021
Summary
  • Gates Foundation Trust’s top new buy is in Microsoft.
  • Other new buys include Kansas City Southern and Deere & Co.
  • Foundation trust also trims holdings in Berkshire and United Parcel Service.
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The Bill & Melinda Gates Foundation Trust, founded in 2000 by

Bill Gates (Trades, Portfolio) and his ex-wife Melinda, disclosed this week 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.

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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.

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Microsoft

The trust purchased 2,937,703 shares of Microsoft (

MSFT, Financial), giving the stake 3.57% weight in the equity portfolio.

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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.

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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.

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Gurus with holdings in Microsoft include

Ken Fisher (Trades, Portfolio)’s Fisher Investments, Pioneer Investments and PRIMECAP Management (Trades, Portfolio).

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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