Bill Gates is a well-known technology entrepreneur. As of 2015, he has a net worth of over $70 billion and is one of the richest people in the world. He founded Microsoft in 1975 and successfully built it into a major technology company, earning himself a fortune in the process.
Gates has since retired from Microsoft and focuses his efforts on his philanthropic causes through the Bill & Melinda Gates Foundation. These causes have included producing a malaria vaccine, gun control reform and education reform. The Foundation has a substantial portfolio of investments. Its investment philosophy is to use capital from the Foundation to help businesses create solutions to complex and entrenched problems. The following are some of the Foundation’s most prominent holdings as of the second quarter 2015.
Berkshire Hathaway, Inc.
The largest holding in the Foundation’s portfolio is Berkshire Hathaway, Inc. (NYSE: BRK.B). The Foundation holds over 9 million shares of Berkshire Hathaway with a market value of $9.3 billion for a portfolio weighting of over 54%. This represents a 2.7% ownership interest in Berkshire Hathaway.
As of October 2015, Berkshire Hathaway is one of the largest companies in the S&P 500 with a market cap of $320 billion. Bill Gates has developed a very close relationship with Warren Buffett since they first met in 1991; Gates serves on the Board of Directors of Berkshire Hathaway. Both investors have signed a pledge to give away a significant portion of their wealth to philanthropic causes.
Canadian National Railway Company
The second largest holding in the Foundation’s portfolio is the Canadian National Railway Company (NYSE: CNI). The Foundation has over 17 million shares with a market value of $989 million for a portfolio weighting of 5.81%. This represents a 2.14% ownership interest.
Canadian National Railway provides integrated transportation services including rail, trucking, freight forwarding and warehousing. The company mainly transports petroleum products, grain and fertilizers, coal, metals and automotive products. It has a market cap of $61 billion and pays a small annual dividend of 1.67%. Although the dividend amount is relatively small, CNI has increased its dividend for 19 consecutive years. This represents a strong commitment to dividend growth.
Canadian National Railway had net revenue of $12.13 billion in 2014, an increase of over 14% from the prior year. This increase in revenue is due in part to greater movement of petroleum and chemical products.
Waste Management, Inc.
Waste Management, Inc. (NYSE: WM) is the fourth-largest holding in the Foundation’s portfolio. The Foundation owns over 18 million shares with a market value of $863 million comprising a 4% ownership interest. Waste Management has a weighting of 5.42% in the Foundation’s portfolio.
Waste Management is a provider of waste management and associated environmental services. It further develops and operates waste to energy and landfill gas to energy facilities in the United States. It is the largest waste management company in the country with over 20 million customers.
Gates is likely attracted to the company due to its strong dividend and environmental commitment. Waste Management is also in a defensive sector. The company is making a strong push to using natural gas for its company fleet with over 50 natural gas fueling stations. Nearly 15% of the company’s fleet runs on natural gas as of 2014, with hopes to expand that number to 80% by 2020. It has a low beta of 0.60 compared with the broader market. This shows the stock is likely less volatile since it is in a defensive sector. People always need waste services no matter how the economy is doing.
The company has a market cap of over $20 billion and pays a strong dividend yield of 3%. The strong dividend draws long-term investors who are not trying to catch short-term moves in the share price. This further reduces the volatility of the stock.