Bill Gates is an ultra-high-net-worth individual that needs no introduction. The second richest man on the globe, Gates is a technologist, business leader, and philanthropist. His present net worth is over $112.7 billion.
Michael Larson from Cascade Investment has been managing Gates’ money since the latter started investing back in 1994. Gates established Bill & Melinda Gates Foundation and appointed Larson as its Chief Investment Officer (CIO). Cascade Investment has been managing the Foundation’s and Gates’ personal wealth since then.
The 64-year old business magnate retired from daily work at his brainchild Microsoft (MSFT) in 2008. He served as the chairman until 2014 and then remained on the company’s board. Gates recently stepped down from the board and is now a full-time family man and investor.
Gates has a unique strategy as he invests across a wide range of assets including real estate, private equity, bonds, and publicly-traded stocks. He presently holds a 23-stock portfolio, which is valued at more than $17.3 billion. Of the 23 stocks, only 14 are publicly traded.
The key takeaway from Gates’ investment style is that he invests mainly in large-cap blue chip stocks. Secondly, his portfolio has heavy exposure to the Financial Services sector.
Warren Buffet’s Berkshire Hathaway (BRK.B) dominates the portfolio representing more than 47%, but the stock is mainly donated to the Foundation. Lastly, out of 14 publicly traded companies held, 11 companies have an attractive dividend history and yield. Thus, the portfolio has a huge dividend income.
Walmart Inc. (WMT), Caterpillar Inc. (CAT), Waste Management, Inc. (WM), Canadian National Railway (CNI) and Canadian National Railway (CNI) are 5 stocks that Bill Gates owns large shares of.
Walmart Inc. (WMT)
WMT is a discount store and supermarket major that operates more than 11,500 retail and wholesale stores in 27 countries worldwide, selling grocery and a variety of general merchandise items. It also serves its customers through its e-commerce website.
Bill Gates started investing in WMT back in 2006 and the investment grew to 7.6% of his portfolio over the years.
The last financial report announced by WMT was for its first quarter ending in April. Revenue grew 8.6% year-over-year to $134.6 billion. E-commerce sales grew 74% amidst the pandemic. WMT delivered an earnings surprise of 5.4% and EPS stood at $1.18 for the quarter. The company’s EPS is expected to grow 8.8% next year.
WMT is the fourth-largest holding of Gates, with more than 11.6 million shares a a market value worth more than $1.5 billion.
WMT has a dividend yield of 1.7% and the stock is currently trading at $129.35, 3.5% less than its all-time high of $134.13.
How does WMT stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Industry Rank
A for Overall POWR Rating
You can’t ask for better. The stock is also ranked #1 out of 18 stocks in the Grocery/Big Box Retailers Industry.
Caterpillar Inc. (CAT)
CAT primarily manufactures construction and mining equipment, diesel and gas engines, industrial gas turbines, and locomotives. The company principally operates through three primary segments — construction industries, resource industries and energy and transportation. It also provides financing services through its financial products segment.
The company acquired select assets of a robot and autonomy technology solutions company, Marble Robot, Inc., in the preceding quarter for robotize expertise. The second quarter witnessed $10 billion in revenue and a 7.8% operating profit margin. CAT reported an EPS of $1.03, beating the consensus estimate by 60%.
CAT is the fifth-largest holding in the Gates’ portfolio and has been in the portfolio since 2005. Its current weighting in the portfolio is 7.53%. Gates holds more than 11.26 million CAT shares, worth more than $1.5 billion.
The stock is currently trading at $134.39. It has recovered more than 53% since its March lows. CAT has a dividend yield of 3% and its EPS is expected to grow at 39% next year.
CAT’s POWR Ratings reflect this promising outlook. It has an overall rating of Buy with a grade of A for Trade Grade and Industry Grade, and a B for Buy & Hold Grade and Peer Grade. It is also ranked #21 out of 59 stocks in Industrial – Machinery industry.
Waste Management, Inc. (WM)
WM is a provider of comprehensive waste management services. The company offers collection, transfer, recycling and resource recovery, and disposal services. It is also a leading developer, operator, and owner of landfill gas-to-energy facilities in the United States.
The company is serving more than 20 million customers with over 302 transfer stations. It operates 103 material recovery facilities (MRFs) and 124 landfill gas-to-energy facilities. It also has 244 active solid waste landfills along with 5 active hazardous waste landfills.
The stock makes up 9.94% of Gates’ portfolio. It is the second-largest holding, with an initial investment made in 2002.
The company has recently finalized its previous quarter, pending acquisition of Advanced Disposal Services, Inc., a step to expand its waste management process. Moreover, the second quarter results impressed the street. Re suffered due to the pandemic, but despite facing lockdowns and shut down of plants, WM managed to report an EPS of $0.88, beating the street estimate by 8.6%.
More than 18.6 million shares of WM are in Gates’ portfolio, with a market value of over $2 billion.
The stock currently trades at $110.37 and its EPS is expected to grow more than 14% next year. WM has a forward P/E ratio of 29.07 and has a dividend yield of 2%.
WM is rated a Buy in our POWR Ratings system. It also has a grade of A for Trade Grad and a B for Buy & Hold Grade and Industry Rank. It is also ranked #4 out of 12 stocks in the Waste Disposal industry.
Canadian National Railway (CNI)
CNI is the third-largest holding in the Gates portfolio. It is a leading Canadian transportation and logistics company that offers transportation services including rail and trucking services, supply chain solutions, freight forwarding, customs brokerage service, industrial development, and marine services in Canada and North America.
Looking forward to encouraging economic recovery and expanding grain export, CNI recently announced its plan to purchase 1500 new hopper railcars. This is a huge capital investment program which might play a key role in CNI’s long-term growth.
Despite the pandemic shuttering the railroad industry, CNI managed to report strong results for the second quarter. The company generated free cash flow of$768 million for the quarter, which is a 103% rise from a year-ago.
Gates has more than 17.1 million shares of CNI with a market value of $1.7 billion. The stock comprises 7.6% of the portfolio’s total holdings. The first investment in CNI was made in 2002.
CNI commands a forward P/E ratio of 24.51 and has a dividend yield of 1.7%. The stock currently trades at $99.46 with a year-to-date gain of 10%.
It’s no surprise that CNI is rated a Strong Buy in our POWR Ratings system. It also has a grade of A for Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. In the 14-stock Railroads industry, it is ranked #2.
Crown Castle International Corp. (CCI)
CCI operates as a Real Estate Investment Trust (REIT) and leases shared wireless infrastructure. It has more than 40000 cell towers operating in the United States and Australia. This Texas-based company has a nationwide portfolio of communications infrastructure that connects cities and communities to essential data, technology and wireless service.
The company was recently named #3 on the Chronicle 100 list for public companies for 2019 due to a demand boom in tower and fiber growth, as major U.S. telecommunication providers are gearing up for wireless data and 5G future.
The company declared its second quarter results last week and it did not fail to impress the street. CCI grew its site rental revenue by 4% to $1.3 billion year-over-year. Adjusted funds from operations (AFFO) rose more than 3% to $609 million despite the sluggish state of the real estate sector.
CCI is the sixth-largest holding in Gates’ portfolio with more than 5.3 million shares. This represents a market value of more than $865 million. He started investing in the company back in 2007, and it currently represents 4.4% of his portfolio.
The REIT currently trades at $163.87, almost 9% below its 52-week high of $180. CCI has a dividend yield of 2.9%.
As per our POWR Ratings, CCI is rated a Buy. It holds a grade of A for Trade Grade and Peer Grade. It also holds a B for Buy & Hold Grade. It is currently ranked #5 out of 41 stocks in the Real Estate Services industry.
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WMT shares rose $0.20 (+0.15%) in after-hours trading Tuesday. Year-to-date, WMT has gained 10.53%, versus a 4.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Sidharath Gupta
Sidharath’s passion for the markets and his love of words guided him to becoming a financial journalist. He began his career as an Equity Analyst, researching stocks and preparing in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge of financial anlaysis and investment strategies. More…
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