Bill Gates’ Investment Company’s 10 Newest Stock Picks
In this article, we examined Bill Gates' investment philosophy, returns and outlook on AI technology. We also examined Bill Gates’ investment company’s 10 newest stock picks. You can skip our detailed analysis and jump directly to Bill Gates’ Investment Company’s 10 Newest Stock Picks.
Bill Gates, who made his fortune from Microsoft Corporation (NASDAQ:MSFT) and began investing in various assets in 1995 through his multibillion-dollar holding company Cascade Investment, L.L.C., has also impressed Wall Street with his investment philosophy. Bill Gates is the sole owner of Cascade Investment, a family office run by Michael Larson, whom Gates hired 27 years ago. Cascade Investment's AUM has increased from $5 billion to around $70 billion as of 2021, thanks to the strategy of diversifying investments into a diverse range of investments.
With 242,000 acres of farmland, Bill Gates’ Cascade Investment is the largest farmland owner in the United States. Bill Gates investment’s in agriculture reached billions of dollars as he believed in enhancing productivity and creating more jobs. Cascade Investment farm stock includes Deere & Company (NYSE:DE). Aside from farm stocks, Bill Gates' stock portfolio includes a 71.3% stake in Four Seasons Hotel and Resorts, a $10 billion private company. Furthermore, Gate's investment firm owns more than 34% of Republic Services, Inc. (NYSE:RSG), a $46 billion waste management company. Cascade Investment's stock portfolio holds a 21% stake in Ecolab Inc. (NYSE:ECL), a hygiene and food safety technology company. Bill Gates' Cascade Investment was the largest shareholder in Canadian National Railway Company (NYSE:CNI) before selling its stake in 2022. The number of Bill Gates' shares in Microsoft Corporation (NASDAQ:MSFT) currently stands at around 103 million, representing a 1.38 % stake in the software giant. Bill & Melinda Gates Foundation Trust also owns Microsoft Corporation (NASDAQ:MSFT) shares worth over $13 billion.
Bill Gates seems optimistic about the potential for the development of artificial intelligence technology. Earlier this year, he wrote in a blog post:
"In my lifetime, I’ve seen two demonstrations of technology that struck me as revolutionary. The first time was in 1980, when I was introduced to a graphical user interface—the forerunner of every modern operating system, including Windows. The second big surprise came just last year. I’d been meeting with the team from OpenAI since 2016 and was impressed by their steady progress. In mid-2022, I was so excited about their work that I gave them a challenge: train an artificial intelligence to pass an Advanced Placement biology exam. Make it capable of answering questions that it hasn’t been specifically trained for. (I picked AP Bio because the test is more than a simple regurgitation of scientific facts—it asks you to think critically about biology.) If you can do that, I said, then you’ll have made a true breakthrough. I thought the challenge would keep them busy for two or three years. They finished it in just a few months."
He stated in another blog post that the risks of AI are real but manageable. He was presenting his ideas in the context of job losses caused by the AI revolution. Here's what he said:
"Whether it was the introduction of cars or the rise of personal computers and the Internet, people have managed through other transformative moments and, despite a lot of turbulence, come out better off in the end. Soon after the first automobiles were on the road, there was the first car crash. But we didn’t ban cars—we adopted speed limits, safety standards, licensing requirements, drunk-driving laws, and other rules of the road. We’re now in the earliest stage of another profound change, the Age of AI. It’s analogous to those uncertain times before speed limits and seat belts. AI is changing so quickly that it isn’t clear exactly what will happen next. We’re facing big questions raised by the way the current technology works, the ways people will use it for ill intent, and the ways AI will change us as a society and as individuals."
It's interesting to note that while Cascade Investment's 13F is not available to the public, we can still get a glimpse of Bill Gates' investment philosophy through the 13F of the Bill & Melinda Gates Foundation Trust. The Trust's portfolio includes both established and emerging companies, demonstrating Gates' ability to invest according to market dynamics. As of the end of the second quarter, the Trust held a 13F portfolio worth $42 billion.
Bill Gates’ Investment Company’s 10 Newest Stock Picks
Methodology
In order to help investors choose the best stocks in a volatile market environment, we selected Bill Gates' investment company’s 10 newest stock picks for this article. The following information is based on the Bill & Melinda Gates Foundation Trust’s second-quarter 13F filings. We track hedge funds like the Bill & Melinda Gates Foundation Trust because Insider Monkey's research has shown that their consensus stock picks can deliver exceptional returns.
Bill Gates’ Investment Company’s 10 Newest Stock Picks
10. Microsoft Corporation (NASDAQ:MSFT)
Value of Bill & Melinda Gates Foundation’s 13F Position: $13.37 billion
Quarter First Initiated Position: Q3, 2021
Although Microsoft Corporation (NASDAQ:MSFT) was a long-standing member of the Bill & Melinda Gates Foundation Trust, the trust sold its entire stake in the company in 2019. However, it initiated a new position in Microsoft Corporation (NASDAQ:MSFT) in the third quarter of 2021 and increased that position to 39.2 million shares in 2022. Microsoft Corporation (NASDAQ:MSFT) is one of the top performers in the Bill & Melinda Gates Foundation's 13F, with shares up 43% in the last twelve months. Furthermore, Microsoft Corporation (NASDAQ:MSFT) offers a dividend yield of 0.91% with a long history of dividend growth.
In the second quarter investor letter, ClearBridge Investments, an investment management company, highlighted reasons why it initiated a position in Microsoft Corporation (NASDAQ:MSFT. Here is what the firm stated about Microsoft Corporation (NASDAQ:MSFT):
“We initiated a small position in Microsoft Corporation (NASDAQ:MSFT) during the quarter, which may seem surprising given our concerns about index concentration. However, we seized the opportunity on a compelling entry point below our business value estimate, due to an anticipated acceleration of demand for Microsoft’s Azure cloud business and incremental revenues from integration of Microsoft’s AI Copilot program into its office platform. We believe this could support double-digit growth, while simultaneously solidifying Microsoft’s competitive position as an AI winner. Even as a small position, we believe Microsoft provides a large portfolio construction benefit given low correlation to the rest of the portfolio.”
9. Deere & Company (NYSE:DE)
Value of Bill & Melinda Gates Foundation’s 13F Position: $1.58 billion
Quarter First Initiated Position: Q3, 2021
Since the third quarter of 2021, Deere & Company (NYSE:DE), which falls under the category of farm stocks, has been a part of Bill Gates' investment company's stock portfolio. Deere & Company (NYSE:DE) is a reputable business with a significant presence in international markets. It has the potential to produce sustainable growth in revenues and profits over the long term. Deere & Company (NYSE:DE) is a global manufacturer and distributor of agricultural, construction, and forestry equipment. In the second quarter of 2023, revenue of Deere & Company (NYSE:DE) increased by 12% year over year, exceeding expectations by $1.74 billion. Furthermore, the company raised its full-year net income forecast to $10 billion. Deere & Company (NYSE:DE) is also known for paying out generous dividends. Its dividend yield is currently around 1.38%.
Deere & Company (NYSE:DE) was in 59 hedge fund portfolios at the end of the second quarter, according to Insider Monkey data. Bill and Melinda Gates Foundation was the largest shareholder in Deere & Company (NYSE:DE).
8. On Holding AG (NYSE:ONON)
Value of Bill & Melinda Gates Foundation’s 13F Position: $16.5 million
Quarter First Initiated Position: Q3, 2022
On Holding AG (NYSE:ONON), like Microsoft Corporation (NASDAQ:MSFT) and Deere & Company (NYSE:DE), is one of Bill Gates' investment company’s 10 newest stock picks. The firm appears to have benefited from its stake in On Holding AG (NYSE:ONON), as shares of the sports products developer have soared 56% in the last year. Baird analyst Analyst Jonathan Komp recently upgraded On Holding AG (NYSE:ONON) to Outperform from Neutral due to strong recent results and a solid three-year pipeline of growth drivers. On Holding AG (NYSE:ONON) is expected to grow earnings by 72% in 2023 and 53% the following year, according to Wall Street.
On Holding AG (NYSE:ONON) has also seen an increase in hedge fund confidence. On Holding AG (NYSE:ONON) was in 32 hedge fund portfolios at the end of the second quarter, up from 22 the previous quarter.
Baron Funds, an investment management firm, expressed confidence in On Holding AG (NYSE:ONON) in its second-quarter investor letter. Here is what the firm stated about On Holding AG (NYSE:ONON):
“In the second quarter, we purchased shares of On Holding AG (NYSE:ONON), a developer and distributor of athletic footwear, apparel, and accessories. On is one of the fastest-growing scaled athletic sports companies in the world. It specializes in products featuring the company’s proprietary cushioning technology, most notably Cloud Tec (flex plates in shoes), Speed board (injection molding), Mission grip (for trails), Helion (super foam cushioning) and The Roger franchise for tennis (Roger Federer invested $50 million in 2019). The products are sold through 8,100 premium retail stores which account for 60% of revenue, and direct-to-consumer sales account for the balance, with the majority of direct-to-consumer done through its website. On has expanded outside of Switzerland and Europe. It operates one flagship retail store in New York City and four smaller format retail stores in China. Roughly half of its revenues are generated in North America, 44% in Europe, and 5% in Asia Pacific.
On has a large market opportunity operating in the $300 billion global sportswear industry, which is forecast to grow at a high single-digit rate through 2025, making it one of the fastest-growing pockets within consumer. The factors driving growth in the industry include continued trends toward athleisure as consumers pivot towards more comfortable and casual attire combined with trends towards healthier lifestyles. The industry is highly competitive with Nike and Adidas garnering 15% and 11% share, respectively. In footwear, the industry is even more consolidated with Nike and Adidas taking over 50% share in the U.S. and over 40% globally. Regardless, we believe On has an opportunity to continue taking share from Nike and Adidas as has been the case over the past couple of years. This is due to the extraordinary quality of its products. Demand is so strong that On has not been able to meet consumer demand for its shoes.
We believe On should be able to grow revenues 20% to 25% annually for many years, while expanding margins. We expect the company to continue to reinvest in its business at high rates of return. It is debt free. Its growth should be driven by growing brand awareness as On expands its geographic footprint. Eventual upselling of its running sneakers across lifestyle, outdoor, and tennis as well as from footwear to apparel and accessories is another long-term opportunity.”
7. Vroom, Inc. (NASDAQ:VRM)
Value of Bill & Melinda Gates Foundation’s 13F Position: $3.6 million
Quarter First Initiated Position: Q2, 2022
The Bill and Melinda Gates Foundation initiated a stake in Vroom, Inc. (NASDAQ:VRM) in the second quarter of 2022, and the position has remained unchanged since then. Vroom, Inc. (NASDAQ:VRM) operates an e-commerce platform for buying and selling vehicles. Vroom, Inc. (NASDAQ:VRM) shares are up 15% year to date, owing to improved financial results. The company has also raised its full-year adjusted EBITDA guidance. During the Q2 earnings call, the Chief Executive Officer of Vroom, Inc. (NASDAQ:VRM) expressed confidence in the company's progress on key objectives. Here's what he said:
“We continued to make progress on our three key objectives and four strategic initiatives, improving Adjusted EBITDA by $8.5 million sequentially. Ecommerce GPPU increased from $2,552 in Q1 2023 to $2,954 in Q2 2023, benefiting from GPPU on unaged units, which exceeded $5,000, as well as vehicle inventory reserves taken in prior periods. We continue to drive process improvements across titling and registration, pricing, marketing, sales, reconditioning and logistics. Looking forward to Q3 2023, we expect <40% of our mix to be aged units. We expect to deliver sequential Adjusted EBITDA improvements through the balance of the year.”
As of the end of the second quarter, the number of hedge fund positions in Vroom, Inc. (NASDAQ:VRM) was 8. Bill & Melinda Gates Foundation was among the leading stakeholders.
6. Carvana Co. (NYSE:CVNA)
Value of Bill & Melinda Gates Foundation’s 13F Position: $13.4 million
Quarter First Initiated Position: Q2, 2022
Bill Gates' investment company first invested in Carvana Co. (NYSE:CVNA) in the second quarter of 2022, and it appears that the strategy worked because shares of the online e-commerce automotive retailer have increased 114% in the last year. Furthermore, Wedbush analysts led by Seth Basham raised their price target for Carvana Co. (NYSE:CVNA) from $40 to $48, representing a 20% increase from the current level. Wedbush increased its price target due to the completion of the debt exchange and improved profitability.
As of the end of the second quarter, Carvana Co. (NYSE:CVNA) was in 41 hedge fund portfolios compared to 33 in the previous quarter.
Like Microsoft Corporation (NASDAQ:MSFT), Deere & Company (NYSE:DE), Vroom, Inc. (NASDAQ:VRM), and On Holding AG (NYSE:ONON), Carvana Co. (NYSE:CVNA) is among Bill Gates' Investment Company's 10 newest stock picks.
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Disclosure: None. Bill Gates’ Investment Company’s 10 Newest Stock Picks is originally published on Insider Monkey.
