Bill Gates is not like other billionaires, who would want to stay out of the spotlight. His role as co-founder and former CEO of Microsoft (NASDAQ: MSFT), which he led for 25 years, is what has made him most famous, but his humanitarian and philanthropic endeavors have solidified his legacy.
Based on Forbes, Gates is now the ninth richest person in the world with a net worth of $131 billion as of this writing. But Gates also joined The Giving Pledge alongside Warren Buffett, stating that he eventually intends to donate “virtually all” of his money to philanthropic organizations.
The organization established to fund those humanitarian endeavors is called The Bill & Melinda Gates Foundation (soon to be known as The Gates Foundation). The organization’s declared objective is “to create a world where every person has the opportunity to live a healthy, productive life.”
Consequently, the foundation has distributed around $54 billion since 2000 in an effort to address “the toughest, most important problems,” such as global poverty and illness.
Although the foundation’s trust has investments in dozens of businesses, just these five stocks account for 87% of the portfolio.
1. Microsoft: 35%
Given that Gates founded the foundation with a sizable percentage of his personal wealth, investors shouldn’t be shocked that Microsoft stock is the trust’s largest position. Roughly 36.5 million shares, valued at $15.47 billion, are owned by the Gates Foundation.
However, this isn’t the Microsoft of your grandfather. In addition to the company’s core software and operating system, Azure Cloud is the second-largest provider of cloud infrastructure, and it is expanding faster than its competitors.
Copilot, the business’s AI-powered digital assistant that is intricately woven across Microsoft’s offerings, helps to further enhance the outcomes. According to Evercore ISI analysts, generative AI might generate an extra $143 billion in income by 2027.
2. Berkshire Hathaway: 16%
Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the trust’s second-largest holding, is largely attributable to billionaire CEO Warren Buffett’s pledge to give away his enormous wealth. Buffett made contributions totaling $36 billion throughout the 16 years that ended in 2022 (the latest year for which information was available). As a result, the trust now holds a position in Berkshire shares worth approximately $7.1 billion, or more than 17.3 million shares.
Until the money is needed, Berkshire Hathaway’s business interests—which include 67 subsidiary firms and stock stakes in over three dozen others—offer quick diversification, making it a desirable investment vehicle. Berkshire produced $97 billion in net profits and $364 billion in revenue last year, a 20% annual growth.
3. Waste Management: 16%
Buffett and Gates both share a fondness for uninteresting enterprises that follow a steady, predictable pattern. There isn’t a company that more closely matches this description than waste, trash, and garbage removal, and Waste Management (NYSE: WM) is the largest. As they say, “one man’s trash is another man’s treasure.” This is probably why the Gates Trust owns more than 35.2 million shares, valued at $7.1 billion.
Its core operations, which are open regardless of the state of the economy, are the collection of recyclables and refuse. In spite of the current crisis, this enabled the business to produce strong performance and increased margins.
4. Canadian National Railway: 15%
Buffett and Gates both have a fondness for trains. Buffett made a strong argument when Berkshire Hathaway purchased Burlington Northern Santa Fe in 2009, stating that trains move cargo “in a very cost-effective way… they do it in an extraordinarily environmentally friendly way… [releasing] far fewer pollutants into the atmosphere.”
It is not surprising that the Gates Trust would own 54.8 million shares of Canadian National Railway (NYSE: CNI), valued at around $6.97 billion, considering their long-standing relationship and shared ideologies.
5. Caterpillar: 5%
Another iconic business is the fifth-largest investment in the trust. An unsteady economy has been a burden for Caterpillar (NYSE: CAT), the world’s largest manufacturer of mining and construction equipment, in recent months.
The company’s strength, however, is found in the variety of its business segments, which also include diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. More than 7.3 million shares, worth more than $2.4 billion, are held by the Gates Trust.
Caterpillar’s revenues are essentially unchanged from the previous year, but cost reductions are raising margins and assisting in raising profitability.
Not to be overlooked is Caterpillar’s solid dividend track record, which contributes to the trust’s higher returns. Since its founding in 1925, the company has paid a dividend annually, as well as a quarterly payout every year since 1933 and increases annually for the previous 30 years. The dividend offers a 1.6% current yield and plenty of room for further increases given its 23% payout ratio.