At $38.9 billion in value, the Bill & Melinda Gates Foundation Trust’s investment portfolio befits Bill Gates’ status as the fourth-richest individual in the world, as measured by the latest Bloomberg Billionaires Index. At $132 billion, Microsoft co-founder Gates clocks in just ahead of former Microsoft CEO Steve Ballmer, at $128 billion.
The Gates Foundation Trust’s latest 13F filing on Nov. 14 with the Securities and Exchange Commission reflects its holdings through Sept. 30 and shows that the total portfolio has shed about $3 billion during a tough quarter. Gates doesn’t mind playing favorites when it comes to stocks: 96% of the trust’s assets are allocated to the 10 top holdings.
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Managed by Cascade Asset Management Co., the trust’s portfolio is stocked with some of the most recognizable brand names on Wall Street — with a lesser-known stock or two tossed into the mix, especially in emerging investment areas like artificial intelligence and vaccines. Cascade Asset Management Co. also oversees Cascade Investment LLC, holder of Gates’ personal assets.
The Gates trust’s preferred menu consists of industrial stocks (comprising $15.6 billion of the $38.9 billion in investments), technology ($12.4 billion) and financial services ($7.9 billion), according to a Ticker Tracker analysis.
To get a better sense of the Gates trust’s overall investment strategy, here’s a closer look at the updated investment portfolio and the stocks that constitute the fund’s top seven selections:
| Stock | % of Portfolio | Market Value of Shares |
| Microsoft Corp. (ticker: MSFT) | 31.9% | $12.4 billion |
| Berkshire Hathaway Inc. (BRK.B) | 20.3% | $7.9 billion |
| Canadian National Railway Co. (CNI) | 15.3% | $5.9 billion |
| Waste Management Inc. (WM) | 13.8% | $5.4 billion |
| Caterpillar Inc. (CAT) | 5.2% | $2 billion |
| Deere & Co. (DE) | 3.8% | $1.5 billion |
| Ecolab Inc. (ECL) | 2.3% | $883.9 million |
Microsoft Corp. (MSFT)
With a market capitalization of $2.8 trillion, Microsoft is the largest company in the Gates Foundation Trust portfolio. In fact, the trust added 21,500 shares to its position, or 0.05%, in the third quarter. The stock is trading at $376.17 per share as of Nov. 16 — that’s up 58.2% on a year-to-date basis.
Microsoft has clearly taken the driver’s seat in the burgeoning artificial intelligence sector, which helped boost the technology giant’s latest quarterly revenues by 13% against 2022’s comparable quarter, to $56.5 billion. Profits came in at about 27% higher year over year, led by Microsoft’s Azure enterprise cloud computing division, which saw revenues rise by 29%.
Microsoft is going all-in on AI, steering $13 billion into its OpenAI arm, creator of the industry-leading ChatGPT generative AI platform. The company has also routed AI features into a bevy of its computing platforms, including Word, Azure, Excel and Microsoft365, signaling a major company shift into one of the fastest-growing technologies of the century.
Gates is a big believer in AI, backing the technology in a March 2023 blog post.
“The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the internet and the mobile phone,” he said. “It will change the way people work, learn, travel, get health care and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.”
Portfolio weight: 31.9% Market value of shares: $12.4 billion
[See: Billionaire Ray Dalio’s 9 Top Stock and ETF Picks]
Berkshire Hathaway Inc. (BRK.B)
The Gates trust sold 2.6 million shares of one of its historically favorite companies (Gates and Berkshire Hathaway founder Warren Buffett are longtime friends), cutting 10.4% of its BRK.B allocation for the third quarter of 2023.
Berkshire shares have held their own in 2023, though, rising 16.5% as of Nov. 16. That’s close to the S&P 500’s 17.4% year-to-date performance.
In a highly uncertain stock market environment, Berkshire Hathaway continues to stack cash, holding a record high of $157.2 billion in cash in Q3, up from $147.4 billion in the second quarter. The Gates Foundation Trust favors large companies with plenty of cash to leverage when business and stock market opportunities arise, and Berkshire certainly fits the bill here.
Another hallmark of a Gates Foundation stock is a diversified income stream, another home run for Berkshire, which owns 60 different companies and holds approximately $350 billion in stock market portfolio assets. If the economy continues to struggle and stocks wilt, Berkshire Hathaway is the kind of defensive stock that a big investor like Gates can find shelter in during stormy market periods.
Portfolio weight: 20.3% Market value of shares: $7.9 billion
Canadian National Railway Co. (CNI)
The Gates Foundation Trust has held this big transportation asset since 2013, building a sizable position in the stock over the past 10 years. Overall, the trust has boosted its stake in the Montreal-based company from 8.6 million shares in 2013 to 54.8 million shares as of Sept. 30. At 15.3% of the total Gates trust portfolio, CNI is the third-largest stock position. CNI shares are trading at $114.09 per share as of Nov. 16, down 2.6% on a year-to-date basis despite a resurgence over the past month.
There is some downside news on the stock.
Company profits were down by 24% in the third quarter of 2023, primarily due to a heated labor strike along Canada’s west coast that stopped rail transport in the region. The strike significantly lowered cargo volumes for most of 2023 after the strike shuttered a dozen transport terminals. Not helping matters was a major uptick in wildfires that shut down rail transportation in Canada. All told, the service interruptions lowered CNI’s third-quarter net income from $1.46 billion to $1.11 billion on a year-to-year basis. Revenues sank 11.5%.
Even so, it’s doubtful that Gates would turn his back on Canadian National after what can reasonably be described as temporary setbacks in 2023 in an otherwise reliable industry.
The railway company is a major player in North America’s robust commercial train transport marketplace, with 20,000 miles of rail touching the U.S. East and West coasts and the Gulf of Mexico. A decent forward dividend yield of 2% should also help keep CNI in play for the Gates trust going forward.
Portfolio weight: 15.3% Market value of shares: $5.9 billion
Waste Management Inc. (WM)
At 13.8% of the total portfolio, Waste Management clocks in as the fourth-largest stock component in the Gates trust. Company shares have taken off since late summer, and WM is up 10.8% on a year-to-date basis. The upside for Waste Management is reliability, as the waste removal and recycling services sector is dominated by a handful of industry players, and WM is at the top of that list with a 24% market share. Cash flow isn’t a problem, with WM returning $283 million in dividends over the last quarter and $370 million in stock buybacks over the same time period.
UBS analyst Jon Windham recently upgraded the stock from “neutral” to “buy,” citing waste stocks as a great way to “ride out” current market turbulence. With the company’s emphasis on environmentally conscious waste management syncing perfectly with Gates’ clean energy vision, this is another stock that likely isn’t going anywhere in the Gates investment realm.
The company’s dividend yield of 1.6% sweetens the pot for income-minded investors across the board.
Portfolio weight: 13.8% Market value of shares: $5.4 billion
[SEE: 10 Stocks Warren Buffett Just Bought.]
Caterpillar Inc. (CAT)
Caterpillar, the farm and agricultural construction machinery titan, has plowed into a stump or two in 2023, with its share price up only 5.7% on a year-to-date basis and down 9.1% over the past 90 days.
The slump is driven by a weak U.S. residential real estate market, which is of particular concern to Caterpillar because it counts on home construction to drive about 25% of its total revenues. Even with real estate sector headwinds, Caterpillar did beat analyst expectations for Q3, with earnings per share rising 40% (against a 21.5% consensus estimate) and revenues up 12% to $16.8 billion (against estimates of 10.5% and $16.6 billion).
The company should also benefit from an estimated $1 trillion in government infrastructure spending that should be flowing more freely in 2024 and 2025, as recent legislation has cleared the way for Uncle Sam to parcel out cash to big construction companies like Caterpillar going forward.
Like his friend and mentor Warren Buffett, Bill Gates likes industry leaders who can keep growing and delivering dividends. With a 2.1% yield and big infrastructure profits stretching far out on the horizon, Caterpillar is set to start bulldozing the competition in 2024.
Portfolio weight: 5.2% Market value of shares: $2 billion
Deere & Co. (DE)
Deere & Co. is the second farm and heavy-construction machinery stock to make the Gates list, comprising a modest 3.8% of the total fund portfolio, with a cash value of $1.5 billion.
Deere shares have fallen from about $420 per share in mid-August to $378.56 per share on Nov. 16 as the company has been jolted by largely the same issue as CAT: lower demand for construction equipment due to a lackluster real estate and commercial building market environment.
Analysts appear to have taken a wait-and-see position on DE shares, with Bernstein’s Chad Dillard maintaining a “hold” call with a $388 target price. Consensus analysts’ take on Deere stock is higher, standing at a “moderate buy” with a one-year target price of $441 per share.
Still, Deere shares have been a major out-performer in the past five years, handily outpacing the S&P 500. Additionally, dividend payouts have risen moderately over the past three years (DE’s forward dividend yield stands at 1.4% today). The company resides at the perch of a reliable industry where demand may ebb and flow, as investors largely view construction and farming as sectors that will be around for a long time.
Since dependability and income are hallmarks of Gates-favored stocks, investors should give Deere a once-over for the value and income portion of their portfolio.
Portfolio weight: 3.8% Market value of shares: $1.5 billion
Ecolab Inc. (ECL)
This clean energy company checks a lot of boxes for Gates, a noted backer of climate change policy and a “founding father” of the green energy revolution. ECL happens to be a market performer, too.
Ecolab, which specializes in sustainable water, hygiene, and energy technology and services, has seen its share price rise by 28.4% in 2023, well ahead of the S&P 500. Plus, the stock has plenty of room for upward movement, according to analysts. Seth Weber at Wells Fargo has a “buy” rating on ECL with a 12-month price target of $215 per share. (It closed at $185.13 per share on Nov. 16.)
The company’s decision to expand its investment in digital technologies and AI should boost productivity and catch the eye of tech-savvy investors like Bill Gates. Customer diversity is another selling point, as Ecolab’s menu of cleaning and sanitation products is a big seller in high-octane sectors like health care, hospitality and industrial markets, ensuring a pipeline of cash throughout periods of market and economic uncertainty.
The company’s rock-solid share-price growth has proven to be an attention-getter, too. Its recent share price around $185 represents a major leap from the $45 per share it fetched in 2010, when it first joined the Gates lineup.
It’s no surprise that the world’s largest cleaning and sanitation company is a pillar in the Gates Foundation Trust portfolio, yet it’s really an eye-opener to see how well it’s performed since the trust bought the stock 13 years ago.
Portfolio weight: 2.3% Market value of shares: $883.9 million
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Bill Gates Portfolio: 7 Best Stocks to Buy Now originally appeared on usnews.com
Update 11/17/23: This story was previously published at an earlier date and has been updated with new information.
