Why write this article?
Purpose
Most people must have a knee-jerk immediate reaction. This article is about Bill Gates. The story of Gates and how he started Microsoft (ticker: MSFT). But this article will not discuss Microsoft’s entrepreneurial story. Just like the theme of this blog and my personal investment philosophy, I am interested in Bill. Why Gates can “long-term” dominate the top few in the world’s wealth list; and often return to the top of the list every few years, this is extremely rare, and he should be the only one in the world’s wealth list with this ability.
Note: In the Forbes world’s billionaires list from 1995 to 2007, Bill Gates was the richest man in the world for 13 consecutive years.
In the “Forbes world’s billionaires list 2023, Bill Gates ranked sixth with assets of 104 billion US dollars.
The reason Gates dominate the list for a long time
I believe that the answer to the question “Why can Bill Gates dominate the world’s top wealth list for a long time?” I believe that the answer to the question is: it is not because he founded Microsoft and is the largest shareholder of Microsoft.
Note: On March 14, 2020, Bill Gates has officially announced his withdrawal from the board of directors of Microsoft and Berkshire. In other words, he no longer has a formal relationship with Microsoft, except that his foundation still owns a large amount of Microsoft stock.
He is indeed still the largest individual shareholder of Microsoft, but this “is not” the main reason for this problem. My personal answer is “Bill Gates is extremely good at managing money“, and his ability in this area even exceeds his ability in the technology industry. Since he ceased to be the CEO of Microsoft, he has devoted most of his time to the operation of the Bill and Melinda Gates Foundation he founded, which has long been the top of the list of global charitable donations. several.
Note:
Only a small portion of Gates’ wealth comes from Microsoft stock, about 12.5%.
Gates spends money every day
But have you thought about it? Bill. Gates has made huge donations every day for the past few decades, and even if he has money, he will run out one day. There are too many rich people on the world wealth list who usually only appear for one year, and most of the rich people on the list are difficult to maintain a huge wealth for a long time (my standard is at least 20 years)────The answer to this question It is very important, so I will not discuss it here, and leave it to you to discuss it yourself.
According to statistics, as of 2020, when Gates left Microsoft in 2008, he donated US$58 billion of personal property to the Bill and Melinda Gates Foundation. According to the data released by the Gates Foundation in February 2020, in the past two decades, the Gates Foundation has donated a total of 53.8 billion US dollars, with an average annual donation of more than 5 billion US dollars to improve global health, public education, climate crisis and other issues.
Gates’ investment
Gates’ investment strategy
In September 2019, Gates said in an exclusive interview with Bloomberg TV: “You know, we are not in a defensive stance, like most of it is cash. The investment strategy that continues to be used is more than 60% (Assets) in stocks.”
Investment agency
There are many investment institutions related to Gates, but the main ones are as follows:
- BMGI: The private assets and charitable funds of the Gates family are managed by BMGI (Bill and Melinda Gates Investments). In June 2021, one and a half months after the Gates couple announced their divorce, BMGI changed its name to Cascade Asset Management.
- Cascade Investment: is the main branch responsible for investing family money; this is the focus of this article.
- Gates Ventures: Gates’ personal investment agency.
- Pivotal Ventures: Melinda’s investment firm.
- Breakthrough Energy: includes the following two investment branches: Breakthrough Energy Ventures and Breakthrough Energy Catalyst.
Cascade Investments
Cascade are at the heart of Gates’ asset
For personal investment, Gates has used Cascade investment company to make countless investments for a long time. Larsen is Bill and Melinda. The chief investment officer of Gates Investment Corporation (BMGI), which manages Gates’ personal property through Cascade Investments, is also responsible for handling Bill and Melinda. Donation from the Gates Trust. Gates hired Larson in 1994 to manage a personal fortune of about $5 billion at the time. Larson used the funds to diversify broadly outside of Microsoft, growing Gates’ fortune to around $80 billion in 22 years (half of which was donated to charity).
BMGI’s structure allows the Foundation to operate independently of its investments. This also means that more wealth will be poured into foundations to fight diseases and improve education in developing countries.
Larson manages Cascade Investments and two foundations. According to Bloomberg data in 2022, Gates is worth about $142.3 billion, of which $118 billion is managed by Larson. Before Larson, Gates’ financial advisor was longtime friend Andrew Evans, who had previously served six months in prison for bank fraud. But by 1993, when Evans’ criminal record hit the front pages, Gates had to find a new money manager to replace him. In 1994, Gates hired Larson, who had previously been a fund manager at Putnam Investments.
Cascade holdings
Bill Gates’ Cascade Investments owns 35% of waste recycler Republic Service (US stock code: RSG), 21% of car dealer Auto Nation (US stock code: AN ), and water treatment company Ecolab Group. (US stock code: ECL) and 7% of the heavy machinery manufacturer John Deere (US stock code: DE), which makes Bill Gates the largest shareholder of these four companies. Cascade Investments also invests in Canadian National Railway (US stock code: CNI), Coca-Cola bottler Femsa (US stock code: KOF), also holds a 4% stake in Berkshire (US stock code: BRK.A and BRK.B), Four Seasons It also holds a 47% stake in the hotel, and also holds partial ownership of the Charles Hotel in Cambridge, Massachusetts, hotels in Atlanta and Houston, etc.
Investments other than stocks
In addition to investing in stocks, Cascade owns:
- With 270,000 acres of farm land, it is the largest landowner in the United States.
- Also has foreign exchange, options, venture capital and real estate under his name
- Corporate bonds and $5.8 billion in bonds, bank loans, treasuries.
Cascade’s performance
Cascade has never publicly disclosed its performance, but it is said that due to Larsen’s relatively conservative strategy, when the financial crisis broke out in 2008, Cascade’s loss was smaller than the 27% annual decline of the Dow Jones Industrial Average, and its annual loss was smaller than that of its peers. From 1995 to 2015, Larson’s compound annual return rate was about 11%. According to people familiar with the matter, since 2001, the fund’s assets under management have returned 8.6% per year, which is higher than the S&P 500’s average annual return of 7.5% over the past 20 years.
Investment style
In addition, Larson will keep $10 billion in funds managed by about 25 outside money managers, bringing in new investment ideas, according to people familiar with the matter.
Several notable features:
- Stablize. For example, the latest filing discloses that Gates owns 15 stocks on the U.S. stock market, ten of which he has owned for ten years.
- Diversification. In a 1999 Fortune story — an interview rarely given during Larson’s career — Larson revealed that his investment strategy was to balance the volatility of Microsoft stock with investments from the Gates Foundation and private assets at the time. Most of the portfolio is bonds, supplemented by a small amount of private equity funds, futures, real estate and hotels.
- Try to maximize profits, the bottom line is not to lose money.
This is a typical family office investment strategy. Their first task is to protect the property, which is why the family office’s investment portfolio is so diversified, including not only public stocks, but also assets such as fixed income, futures and art.
Investment in technology and biotech industry
Investments in technology and biology are not within the scope of the Cascade, but are in charge of Gates himself. He founded a digital photo company Corbis Corp in 1989 (acquired by Vision China in 2016), and small investments include nuclear power company TerraPower LLC And the artificial meat company Beyond Meat (Beyond Meat, US stock code: BYND) and so on.
Breakthrough Energy
Gates has invested in a variety of stocks and assets, and co-founded Breakthrough Energy, a $1 billion investment fund, with 20 other companies.
It mainly consists of two parts, one is Breakthrough Energy Ventures (BEV), established in 2015. The other is the Breakthrough Energy Catalyst Project Fund (Breakthrough Energy Catalyst, BEC), established in 2021.
BEC
BEC is currently focusing on five major technology research and development: green hydrogen, sustainable aviation fuel, long-term battery energy storage, direct air capture and decarbonization of cement, steel, plastic and other manufacturing industries.
BEV
It has been nearly 8 years since BEV was established, and it has raised more than US$2 billion (including US$1 billion in the first phase of BEV, US$1.25 billion in the second phase of BEV, and EUR 100 million in BEV Europe), and has supported more than 90 start-up companies.
The original intention of BEV was to invest in scientific breakthroughs that have the potential to bring cheap and reliable clean energy to the world, with the ultimate goal of bringing new zero-carbon emission technologies to market. The fields involved include carbon dioxide capture, energy Internet of Things, biosynthesis, energy storage companies, sustainable fuels, power batteries and many other fields.
Top five holdings
According to the 13F report released on August 14, 2023, the total holdings of Bill & Melinda Gates Foundation Trust Holdings in US stocks in the second quarter reached US$42.06 billion. The foundation’s holdings are relatively concentrated, with the top ten holdings accounting for 96.14% of its total investment portfolio, as shown in the table below
| Stock | Company Name | % of Portfolio | Shares Owned | Value | Average Buy Price |
|---|---|---|---|---|---|
| MSFT | Microsoft Corp | 31.79% | 39.26M | $ 13.37B | $245.63 (+31.0%) |
| BRKB | Berkshire Hathaway Inc Del | 20.38% | 25.14M | $ 8.57B | $223.96 (+52.3%) |
| CNI | Canadian Natl Ry Co | 15.78% | 54.83M | $ 6.64B | $98.83 (+15.3%) |
| WM | Waste Mgmt Inc Del | 14.53% | 35.23M | $ 6.11B | $95.11 (+67.1%) |
| CAT | Caterpillar Inc | 4.30% | 7.35M | $ 1.81B | $84.84 (+226.9%) |
| DE | Deere & Co | 3.77% | 3.92M | $ 1.59B | $322.93 (+33.7%) |
| ECL | Ecolab Inc | 2.32% | 5.22M | $ 974.16M | $93.23 (+95.1%) |
| KOF | Coca-cola Femsa Sab De Cv | 1.23% | 6.21M | $ 517.75M | $152.02 (-45.2%) |
| WMT | Walmart Inc | 1.13% | 3.02M | $ 474.82M | $74.73 (+113.0%) |
| FDX | Fedex Corp | 0.90% | 1.53M | $ 380.37M | $156.52 (+69.7%) |
Charity
Bill & Melinda Gates Foundation
The Bill & Melinda Gates Foundation was established in 2000 and is headquartered in Seattle, USA. Gates and his ex-wife Melinda Gates are the co-chairs of the foundation. Gates announced in September 2022: “The Foundation’s goal is to operate for another 25 years, and future goals include efforts to eradicate infectious diseases or any diseases that make the world unfair, at least to reduce their incidence to a very low level. “
The announcement comes two months after Gates announced a $20 billion gift to the private foundation, one of the largest in philanthropic history. Gates also pledged to donate another $20 billion “sometime in a few years” and continue to donate after that until he disappears from the billionaire list.
Notable donations
Gates In November 2017, Gates invested $50 million in Alzheimer’s research. He and his wife, Melinda, were recently named America’s most generous philanthropists by The Chronicle of Philanthropy and have donated more than $36 billion to philanthropic causes through the Bill & Melinda Gates Foundation. The foundation has also committed at least $2.5 billion to the Global Alliance for Vaccines and Immunization, which works to improve vaccine availability in poor countries.
Bill Gates announced in November 2022 that his Bill and Melinda Gates Foundation will invest more than $7 billion over the next four years to support African countries in implementing gender equality, improved health and agricultural initiatives on the continent. Cutting edge method.
As health experts from around the world gather for a summit in Berlin, Germany, the Bill & Melinda Gates Foundation announced in October 2022 a commitment of $1.2 billion to eradicate polio. And plans to donate more than $1 billion as part of a national effort to improve math education in the United States over the next four years.
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