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Will Bill Gates’ Divorce Affect These Stocks?

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·11 min read
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In this article we will take a look at the 10 stocks that can be affected by Bill Gates' divorce. You can skip our detailed analysis of these companies, and go directly to the 5 Stocks that can be Affected by Bill Gates' Divorce.

After being married for 27 years, two of the world's most powerful philanthropists, Bill and Melinda Gates, decided to part ways and end their marriage. The news was quite surprising for many in the philanthropy world as the pair was holding a wealth of around $124 billion and raises questions over the future of Bill & Melinda Gates Foundation Trust, which has roughly $22 billion in US stocks and billions of dollars in other securities. The pair is the largest donor of the Bill and Melinda Gates Foundation, with the aim of working on education, healthcare, and environmental factors.

"After a great deal of thought and a lot of work on our relationship, we have made the decision to end our marriage," the Microsoft Corporation (NASDAQ: MSFT) founder said. "Over the last 27 years, we have raised three incredible children and built a foundation that works all over the world to enable all people to lead healthy, productive lives."

In a petition for marriage dissolution, the couple stated their legal relationship was "irretrievably broken," and they already settled on how to distribute their assets. It’s not yet clear yet how they will divide the fortune. According to a Securities and Exchange Commission filing, $2 billion worth of stock is transferred from Bill Gates to Melinda Gates through Gates' investment holding Cascade Investment. The transfer includes stock of Canadian National Railway Company (NYSE: CNI), Coca-Cola Femsa, S.A.B. de C.V. (NYSE: KOF) and Grupo Televisa, S.A.B. (NYSE: TV), and AutoNation, Inc. (NYSE: AN).

Bill and Melinda Gates' Notable Holdings

Cascade Investment is the biggest asset of Microsoft Corporation (NASDAQ: MSFT) founder Bill Gates, which he established using proceeds of Microsoft Corporation (NASDAQ: MSFT) stock sales. Cascade has been managing a large portfolio of assets including real estate, energy, and hospitality. Gates' investment firm held a $12 billion stake in agricultural-machinery maker Deere & Company (NYSE: DE), and an $11.8 billion position in waste-management company Republic Services, Inc. (NYSE: RSG), Canadian National Railway Company (NYSE: CNI), and Ecolab Inc. (NYSE: ECL) are among the biggest holdings of Cascade Investment. The portfolio has been managed by Michael Larson, who is also responsible for managing Bill & Melinda Gates Foundation Trust portfolio.

Some notable holdings of the foundation include Apple Inc (NASDAQ: AAPL), Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT).

Even though Bill & Melinda Gates Foundation Trust slashed its stake in Apple Inc (NASDAQ: AAPL) by 50% in the fourth quarter, the fund still owns over 1 million shares of the company, worth $132.3 million. Apple Inc (NASDAQ: AAPL) is currently in the news after Cathie Wood’s ARK Fintech Innovation ETF (NYSEARCA:ARKF) sold 30% of its stake in the company. The move comes as Cathie Wood’s ETFs, which were once gaining a lot of attention due to their stunning gains, are losing ground. Recently, Morgan Stanley analyst Katy Huberty slashed his outlook for Apple (NASDAQ:AAPL) Services growth for the June quarter, citing “softer than expected” app store data for April.

Gates’ foundation also owns a stake in Walmart (NYSE:WMT). The fund owns 11,603,000 shares of the retail giant, worth $1.7 billion. Walmart (NYSE:WMT) is foraying into the healthcare segment, following the footsteps of its rival, Amazon (NASDAQ:AMZN). Walmart (NYSE:WMT) recently announced that it plans to buy telehealth provider MeMD. Walmart (NYSE:WMT) said that the deal would allow Walmart Health to provide access to virtual care across the country.

Gates’ foundation slashed its stake in Amazon (NASDAQ:AMZN) in the fourth quarter by 50%, entering 2021 with just 30,230 shares of the company, worth $98,457,000. Amazon (NASDAQ:AMZN) shares have gained 36% over the last 12 months. Earlier this month, it was reported that Amazon (NASDAQ:AMZN) plans to launch its first robotics fulfillment center in Louisiana. The facility will create over 1,000 new full-time jobs.

The foundation’s portfolio held a stake in companies that are offering steady share price gains and dividends. Gates Foundation has also been using a concentrated portfolio management strategy, with the top ten holdings accounting for 95% of the overall 13F portfolio.

Bill and his ex-wife plan to work together for the foundation. The Gates Foundation stated in a statement that both will continue working as co-chairs and trustees of the organization.

"They will continue to work together to shape and approve foundation strategies, advocate for the foundation’s issues, and set the organization’s overall direction," the foundation's statement said.

They also don’t want to distribute their wealth among children. Gates family and matrimonial attorney Vicky Poumpouridis stated in a FOX Business interview that Bill Gates plans to donate his fortune for charitable purposes instead of passing it to children.

Will Bill Gates' Divorce Affect These Stocks?
Will Bill Gates' Divorce Affect These Stocks?

While Bill Gates' reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Let’s start reviewing the 10 stocks that can be affected by Bill Gates' divorce. We used Bill & Melinda Gates Foundation Trust's 13F portfolio for the fourth quarter of 2020 for this analysis. Because these are the top holdings of the foundation, any changes made to the portfolio of Bill & Melinda Gates Foundation Trust could affect these stocks in the coming weeks.

Will Bill Gates' Divorce Affect These Stocks?

10. United Parcel Service, Inc. (NYSE: UPS)

Number of Hedge Fund Holders: 48

The courier company United Parcel Service Inc (NYSE: UPS) is the tenth-largest stock holding of the Bill & Melinda Gates portfolio, accounting for 2.91% of the overall portfolio. The non-tax entity first initiated a position in United Parcel Service Inc (NYSE: UPS) during the fourth quarter of 2014. The company has a long history of returning cash to investors in the form of dividends. Moreover, its shares rallied more than 110% in the past five years.

In its Q4 investor letter, Saturna Capital Corporation, an investment management firm, highlighted a few stocks including United Parcel Service. Here’s what Saturna Capital Corporation stated:

“United Parcel Service Inc (NYSE: UPS) is a new holding in the Fund, and we are excited about the opportunity for new management to improve operating metrics after several years of inconsistent performance.”

9. FedEx Corporation (NYSE: FDX)

Number of Hedge Fund Holders: 63

The air courier service FedEx Corporation (NYSE: FDX) is the long-running stock holding of Gates' portfolio. His foundation first initiated a position in FedEx Corporation (NYSE: FDX) in 2005 and it currently represents 3% of the entire 13F portfolio. FedEx Corporation (NYSE: FDX) offers slightly less than 1% dividend yield but it has long dividend growth history. On the other hand, the company’s shares surged close to 170% in the last twelve months.

Longleaf Partners Fund mentioned a few stocks including FedEx Corporation (NYSE: FDX) in the fourth quarter investor letter. Here is what Longleaf Partners Fund stated:

“FedEx (76%, 3.69%; 3%, 0.29%), the global logistics company, was the top contributor in 2020 after an outstanding year for the business that wasn’t simply the result of COVID, even if the company has been a strong beneficiary of the rapid societal changes driven by it. The share price returned over 85% in the last six months. Over the last quarter, Ground revenues increased 38%, while operating income grew 61%, despite another round of heavy investments weighing down margins temporarily into the single-digits. The company is indispensable for the United States’ e-commerce deliveries and is reaping the rewards of its investments in previous years to gear up for 7-day delivery. The Express segment is still benefitting from fewer passenger flights diminishing competing underbelly capacity. Despite the sharp appreciation, the stock trades at a reasonable mid-teens P/E multiple on forward earnings, and we expect the value to grow double-digits annually from here. FedEx has done its part to give back this year in the face of COVID. Since the onset of the pandemic, FedEx Corporation (NYSE: FDX) has delivered more than 55 kilotons of personal protective equipment, including more than two billion face masks, and more than 9,600 humanitarian aid shipments around the globe. More recently, FedEx Corporation (NYSE: FDX) was tapped to deliver the first wave of Pfizer-BioNTech vaccines across the US, and its infrastructure will be critical to successfully disseminating the vaccines.”

8. Crown Castle International Corp. (REIT) (NYSE: CCI)

Number of Hedge Fund Holders: 40

The real estate investment trust Crown Castle International Corp. (NYSE: CCI) is among the dividend-paying companies. It ranks 8th in the list of stocks that can be affected by Bill Gates' divorce. Crown Castle International Corp. (NYSE: CCI) currently offers a quarterly dividend yield of 2.90%. Moreover, its shares are up 15% year to date. The foundation held 5.3 million shares of Crown Castle International at the end of December.

Like Apple Inc (NASDAQ: AAPL), Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT), CCI is one of the notable stocks that can be affected by Bill Gates' divorce.

Hedge funds were cutting their exposure to Crown Castle International Corp. (NYSE: CCI). The number of bullish hedge fund positions was cut by 2 lately. Crown Castle International Corp. (NYSE: CCI) was in 40 hedge funds’ portfolios at the end of the fourth quarter of 2020 compared to 42 positions in the previous quarter.

7. Ecolab Inc. (NYSE: ECL)

Number of Hedge Fund Holders: 45

The specialty chemical company Ecolab Inc. (NYSE: ECL) is the seventh-largest stockholding of Bill and Melinda Gates portfolio at the end of December, accounting for 3.60% of the overall portfolio. The foundation has been holding a position in Ecolab Inc. (NYSE: ECL) over the last decade. Shares of ECL rallied close to 340% in the last ten years and it raised dividends in the last 28 straight years.

Like Apple Inc (NASDAQ: AAPL), Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT), ECL is also one of the stocks that could be affected by Bill Gates' divorce.

Ecolab Inc. (NYSE: ECL) shareholders have witnessed a decrease in hedge fund sentiment lately. Ecolab was in 45 hedge funds’ portfolios at the end of December compared to 52 positions in the previous quarter.

6. Walmart Inc. (NYSE: WMT)

Number of Hedge Fund Holders: 70

The grocery store chain Walmart Inc. (NYSE: WMT) is among the most famed dividend stocks. It ranks 6th in the list of stocks that can be affected by Microsoft Corporation (NASDAQ: MSFT) founder Bill Gates' divorce. Walmart Inc. (NYSE: WMT) paid dividends in the last 47 straight years. It is the sixth-largest stock holding of Gates' portfolio, accounting for 6.38% of the overall portfolio. Walmart Inc. (NYSE: WMT) underperformed this year amid economic reopening and the shift in investors’ sentiments.

The best stock pickers were getting bearish. The number of long hedge fund positions in Walmart Inc. (NYSE: WMT) declined by 1 lately. Walmart Inc. was in 70 hedge funds’ portfolios at the end of December compared to 69 positions in the previous quarter.

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Disclosure: None. Will Bill Gates' Divorce Affect These Stocks? is originally published on Insider Monkey.