TLDR
- Bill Gates’ Foundation holds 67% of its $49 billion portfolio in just three stocks: Microsoft (28.6%), Berkshire Hathaway (24.1%), and Waste Management (14.1%)
- Warren Buffett has donated billions in Berkshire Hathaway shares to the foundation annually, with the requirement that donations be spent within one year
- Microsoft remains the foundation’s largest holding at $13.9 billion despite recent share sales, benefiting from strong AI and cloud computing growth through Azure
- Berkshire Hathaway recently acquired OxyChem for $9.7 billion and holds $340 billion in cash, with the foundation’s position worth $11.8 billion
- The foundation’s Waste Management stake is worth $6.7 billion, reflecting Warren Buffett’s preference for businesses with strong competitive advantages
Bill Gates plans to give away 99% of his $106 billion fortune through his foundation by 2045. The foundation’s investment trust shows heavy concentration in three companies.
The Gates Foundation trust holds $49 billion in marketable equities. More than two-thirds of this portfolio sits in just three stocks.
Warren Buffett’s influence appears throughout the portfolio selection. The longtime friend has donated billions to the foundation over many years. His value investing philosophy shapes the trust’s holdings.
The foundation filed its most recent 13F with the Securities and Exchange Commission. The filing revealed stakes in a couple dozen companies. Three positions dominate the entire portfolio.
Gates founded the charitable organization with his now-ex-wife Melinda in 2000. He has donated billions in Microsoft shares since then. The foundation plans to double its spending rate over the next two decades.
Microsoft Leads Portfolio at $13.9 Billion
Microsoft makes up the largest position at 28.6% of the portfolio. The foundation holds 26.2 million shares worth $13.9 billion. Gates donated nearly 39 million Microsoft shares to the foundation in 2022.
The foundation recently sold a couple million shares. Microsoft still remains the trust’s biggest holding. The position reflects Gates’ continued confidence in his former company.
The company has grown its cloud computing platform Azure into a $75 billion business. Revenue growth has accelerated as Microsoft brings more AI-capable infrastructure online. Management reports that demand continues to exceed available supply.
Microsoft’s enterprise software business generates double-digit revenue growth. New AI features allow the company to charge higher prices and improve user retention. The company produces tens of billions in free cash flow each quarter.
Microsoft invested early in OpenAI to build its AI capabilities. The company integrated generative AI services into Azure. It also added AI functionality to its Microsoft 365 productivity suite.
Berkshire Hathaway Position Worth $11.8 Billion
Warren Buffett has donated Berkshire Hathaway shares to the Gates Foundation for many years. His donations come with a requirement that the foundation spend the entire contribution value within one year. The trust must also spend at least 5% of its other assets annually.
Berkshire Hathaway Inc., BRK-B
The foundation holds 24.1 million Berkshire Class B shares worth $11.8 billion. This represents 24.1% of the trust’s portfolio. The trustees built this position over time despite the spending requirements.
Berkshire’s operating earnings beat expectations in the most recent quarter. The insurance business experienced some normalization after strong performance. California wildfires and other catastrophes weighed on insurance results in the first half of the year.
Berkshire has reduced positions in several major holdings over recent years. The company now holds $340 billion in cash and equivalents. Cash plus liquid equities exceed $650 billion.
Berkshire recently purchased OxyChem from Occidental Petroleum for $9.7 billion. The company kept its preferred shares in Occidental, which pay 8% annually. Buffett and soon-to-be CEO Greg Abel found value in the acquisition.
Berkshire stock trades at a price-to-book ratio of 1.6. This sits above the 1.5 level where Buffett typically authorizes share buybacks. The ratio may be more attractive when third quarter book value is reported.
Waste Management Stake Reaches $6.7 Billion
Waste Management represents 14.1% of the foundation’s portfolio at $6.7 billion. The foundation holds 32.2 million shares and rarely sells this position. The stock reflects Warren Buffett’s influence on Gates’ investing approach.
The company owns 262 landfills across its operations. Scale advantages allow Waste Management to design efficient trash collection routes through cities. These two factors create better operating margins than smaller competitors.
Regulatory barriers prevent competitors from developing new landfills. Existing landfill ownership provides an unmatchable competitive advantage. New entrants face impractical hurdles to building similar infrastructure.
Waste Management’s collection and disposal business expanded its adjusted EBITDA margin to 38.4% in the third quarter. Lower commodity prices affected the recycling business. The medical waste division produced disappointing sales.
Management provided 2027 guidance of $28.5 billion to $29.25 billion in revenue. Adjusted EBITDA guidance ranges from $8.85 billion to $9.15 billion. This represents average annual growth of 9% and 11% respectively through 2027. The company’s enterprise value of $106 billion trades at 14 times forward EBITDA estimates.
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