What Stocks Is Bill Gates Buying?

Bill Gates probably isn’t as well-known for his stock-picking acumen as he is for his other business-related successes. But with the Bill & Melinda Gates Foundation Trust now operating with assets under management of just short of $23 billion, it’s about time that changed. 

So, without further ado, here’s a selection of some of the most important stocks that Bill Gates is buying right now.

Waste Management, Inc.

It’s easy to see why Waste Management, Inc. is the second biggest stock position in Bill Gates’s portfolio at the moment.
The company grew 100% in value over the last 5 years, as well as outperforming the S&P 500 by 110% during the previous decade too.
The business might not be as exciting as the latest high-growth fintech right now, but the firm’s reliable performance as an Industrial sector staple certainly gets the Microsoft founder’s attention and capital.

And why wouldn’t it? WM is North America’s market leader when it comes to the critical business of waste management, and the firm’s excellent fundamentals reflect themselves in the brand’s high relative gross profit margins of 38%.
The company also managed to generate solid increases in organic revenue in the Fourth Quarter – a big achievement indeed, given the challenging regulatory environment it was operating in.
With high-income countries expected to generate 19% more waste per capita between now and 2050, it looks like there’ll be no shortage of work for the likes of Waste Management, Inc.
In fact, WM is also a major player in the waste-to-energy business too, which, with strong tailwinds from the green and renewable energy sector, should see the company continue to grow for quite some time. And with 18.6 million Waste Management shares to his name, what’s good for WM is also good for Bill Gates too.

United Parcel Service, Inc.

UPS recently reported record earnings and revenue numbers for the Fourth Quarter 2021, with the continuing global supply chain crisis having hit the international logistics company not one bit.
Indeed, the business seems only to have excelled in the face of other secular headwinds – such as the COVID-19 pandemic – as an explosion in e-commerce and home deliveries has led to greater demand for the firm’s services.

And it’s not just the company’s financial metrics that are going up either; UPS stock has appreciated 33% this last year – and there’s even more good news on the horizon for investors too.
The firm just announced a massive 49% dividend increase, with quarterly payouts going up from $1.02 to $1.52. Strangely enough, dividend increases had actually been slowing down at UPS, so the reversal in trend is especially welcome – and bodes well for the business as a whole.
In fact, the company’s management stated that it wants to deliver a 50% payout ratio, meaning that if earnings keep growing as they have done lately, shareholders should see their dividends keeping pace as well.
In addition to the dividend payout hike, UPS also expects to execute a share buyback plan worth $1 billion in 2022. Given how richly the company rewarded its investors recently, it’s no secret why United Parcel Service, Inc. is Bill Gates’ ninth largest holding overall.

Caterpillar Inc.

Construction machinery manufacturer Caterpillar has had a rough time of it lately. The company lost around a sixth of its value over the last 52 weeks of trading, and the optimism stoked by a recent quarterly earnings beat was quickly quashed on news of higher costs and reduced margins.

However, the firm, which makes up 8.72% of the Bill & Melinda Gates Foundation Trust portfolio and is worth around $2 billion of its holdings, still maintains steady revenue growth and shouldn’t be written off just yet.
Yes, CAT’s Fourth Quarter operating profit margin fell from 12.3% to 11.7% on a year-on-year basis, but its revenues grew enormously from $11.2 billion to $13.8 billion for the same period.
Furthermore, the company’s forward 2023 P/E ratio of 13.7x  is a significant improvement on its current 18.8x, and, if, as Wall Street analysts expect, its operating profit margin does grow to 15.7% next year, Caterpillar should have righted its temporarily tilting ship.

FedEx Corporation

Complementing Bill Gates’ already mentioned UPS holdings, his Foundation Trust also owns shares in the FedEx Corporation, the smaller half of the logistics duopoly operated by the two companies.
But, unlike its larger counterpart, FDX has not had as good a year as UPS has had thus far. In fact, FedEx is down more than 12% overall – or 26% if you measure it against its yearly high of $310.
For the Bill & Melinda Gates Foundation Trust, that’s not good – the stock is the foundation’s tenth largest investment, and, with a stake of 1.49 million shares worth $386 million, that’s a big loss.

Still, for potential investors who don’t already hold the company, its recent price woes might actually present an opportune buying moment.
FDX’s year-on-year EBITDA growth is astonishing at over 48%, and its forward price-to-sales multiple of 0.66x demonstrates its value credentials perfectly. If that doesn’t seal the deal for you, then its return on equity growth of 73% surely must, as will its operating income appreciation of 9% year-on-year.
Interestingly, Bill Gates hasn’t divested any of his FedEx position for the last four quarters now, suggesting that the one-time software developer still thinks the stock has value left to run.

Crown Castle International Corp.

It seems fitting that if Bill Gates was going to invest heavily in a real estate investment trust (REIT), he’d do it with one that had a certain technological flavor to it. And so it is with Crown Castle International Corp., a REIT which specializes in the management of shared communications infrastructure, including 40,000 cell towers and 80,000 miles of fiber network.

What’s particularly promising about CCI is its opportunity in the developing 5G build-out space. This is important for REITs like Crown Castle, because it implies a kind of baked-in growth driver for the company’s dividend.
Indeed, many of the communications companies that CCI carries – Verizon, AT&T, DISH Network and T-Mobile – are all deeply invested in the success of 5G, which should spill over to Crown Castle’s bottom-line too.
The company’s dividend payout has been compounding very nicely now for quite some time, with a CAGR of 9% over the previous seven years. Crown Castle’s business boasts an EBITDA margin in the region of 60%, and an AFFO yield of above 4%.
Its last dividend was worth $5.88 in 2021, up 11% from $5.32 in 2020. Given these kind of numbers, it’s safe to say that the Gates Foundation, with 4.56 million CCI shares, should see a good return from its $953 million investment.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.