Bill Gates is best known as the co-founder of Microsoft, but he also manages one of the world’s largest and most influential investment portfolios through the Bill & Melinda Gates Foundation Trust. The trust recently disclosed its stock holdings as of December 31st, providing a rare glimpse into how one of the world’s wealthiest entrepreneurs is investing his $42 billion fortune.
Gates’ portfolio stands out for its concentration in lesser-known stocks and an environmental sustainability theme. While many ultra-rich investors flock to flashy tech stocks, Gates prefers reliable stalwarts in industries like railroad, waste management, and heavy equipment manufacturing. His trust also favors companies with environmental, social, and governance (ESG) friendly business models.
Let’s examine the top 10 stock holdings revealed in the trust’s latest regulatory filing and what they tell us about Gates’ long-term investing strategy:
#1 Microsoft (MSFT) – $14.4 Billion
It’s no surprise that Gates’ top position remains in the software giant he co-founded back in 1975. Microsoft accounts for over a quarter of the trust’s investments, proving that Gates maintains confidence in the future of the business he spent decades building. Under current CEO Satya Nadella, Microsoft has successfully transitioned from solely software to cloud services and now competes with Amazon and Google in offering storage, computing, and AI capabilities through Azure. Though no longer involved in day-to-day operations, Gates continues to shape Microsoft’s future through his seat on the board and insightful commentary on where technology is headed.
#2 Berkshire Hathaway (BRKB) – $7.1 Billion
Gates has a close relationship with Berkshire CEO Warren Buffett, whom he considers a mentor and friend. Berkshire stock was actually gifted to the Gates Foundation by Buffett himself. Though he trimmed the position recently by 12%, Berkshire remains a core long-term holding for Gates. He likely appreciates the conglomerate’s diversified collection of businesses across insurance, utilities, manufacturing, and retail. The Oracle of Omaha has also proven adept at allocating capital for growth over decades. With Buffett now 91, the trust seems to be slowly diversifying away from Berkshire as leadership eventually transitions.
#3 Canadian National Railway (CNI) – $6.9 Billion
Bill Gates has an affinity for railroad stocks, and Canadian National is his largest position in the sector. The Montreal-based freight rail transporter operates over 20,000 miles of track across Canada and the Midwestern United States. Railway stocks in general are prized for their durable competitive advantages and consistent dividends. Canadian National also scores points for fuel-efficiency and lower emissions relative to trucking. Gates sees railroads as a smart bet on economic growth, while limiting environmental impact.
#4 Waste Management (WM) – $6.3 Billion
Staying with the environmental theme, Waste Management is one of Gates’ favorite plays on sustainability. The Houston company specializes in recycling, landfill operations, and renewable energy generation. With the world focused on reducing pollution and embedded carbon, waste management has become an investment priority. As one of the largest environmental solutions providers, WM is well-positioned to capitalize on secular trends while also maintaining steady profits. Gates has not trimmed his stake in years, suggesting a firm long-term commitment.
#5 Caterpillar (CAT) – $2.2 Billion
Caterpillar is the world’s top manufacturer of heavy construction and mining equipment. Gates sees the company as a leveraged bet on infrastructure spending and global development. With trillions in funding now earmarked for roads, bridges, utilities, and renewable energy projects, demand seems locked-in for Caterpillar’s logistics solutions. The stock also provides income via its consistent dividend and buyback program. If the global economy continues growing at a healthy clip, Caterpillar should continue benefitting.
#6 Deere (DE) – $1.4 Billion
Similar to Caterpillar, Deere produces essential equipment for agriculture, construction, and forestry. It’s actually the largest agriculture machinery company worldwide. With global population growth continuously boosting demand for farming equipment, Deere enjoys fundamental tailwinds. Its precision agriculture technologies also help farmers optimize crop yields and efficiency. Given its dominance in an economy mainstay like farming, it’s easy to see why Gates believes in Deere for the long haul.
#7 Ecolab (ECL) – $1 Billion
Ecolab provides cleaning products and services to restaurants, hotels, hospitals, and other commercial clients. Hygiene became more important than ever during the pandemic, but Ecolab has proven its worth for decades as an essential B2B partner. The company also assists with water management, helping clients conserve and optimize usage while limiting ecological impacts. Ecolab checks important boxes related to health, sanitation, and sustainability that appeal to Gates’ sensibilities.
#8 Coca-Cola FEMSA (FMX) – $588 Million
This position is one of Gates’ more surprising holdings. FEMSA is the largest Coca-Cola bottling franchise in the world in terms of sales volume. While it does not have the brand recognition of Coca-Cola itself, the Mexico-based company controls Coke branding and distribution throughout large swaths of Latin America. FEMSA also bottles other soft drinks, owns convenience stores, and invests in logistics. It’s a smart play on the continued growth and economic development of emerging markets.
#9 Walmart (WMT) – $478 Million
Another relatively small position, Walmart allows Gates to gain exposure to retail and consumer spending patterns. Over the past decade, Walmart invested heavily in e-commerce and omnichannel capabilities to keep pace with Amazon and Target. The Arkansas company now competes digitally while leveraging its unmatched brick-and-mortar footprint. Walmart’s moves into finance, advertising, and healthcare also provide potential growth runways beyond retail. With its low-cost edge and renewed focus on tech, the retail giant seems poised for continued success.
#10 FedEx (FDX) – $388 Million
Rounding out the top 10 is delivery and logistics titan FedEx. Gates sees the Memphis company as a smart indirect investment in e-commerce and global trade. While FedEx faces competition from UPS and startups, it still dominates key niches like air cargo transport. The company is also investing aggressively in automation technology to protect its margins. With cross-border business still growing rapidly, FedEx is in prime position to facilitate and benefit from rising global flows of goods and information.
Key Takeaways: What Gates’ Holdings Reveal About His Strategy
Taken together, the stocks and sectors prioritized by Gates provide insight into his long-term approach:
- Favors incumbents over unproven disruptors. Picks like Microsoft and Walmart indicate a preference for established leaders with durable moats.
- Believes in railroads and heavy industry. Major stakes in CNI, CAT, and DE bet on infrastructure spending and global development.
- Consistent ESG emphasis. From WM to ECL, sustainability is a clear focus, even when profit-minded.
- Thinks globally. Investments like FEMSA and FedEx provide emerging markets and trade exposure.
- Seeks dividends and buybacks. Holdings like WM and MSFT channel cash to shareholders.
Though his trust has underperformed recently, Gates plays a very long game focused on slow compounding. His patience and temperament serve as a model for investors fretting over short-term volatility. By sticking to companies underpinning the real economy, his trust seems well-positioned for steady gains over the next decade – pandemic or not.
