Bill Gates Beat S&P 500 Returns And Here Are His Holdings
Bill Gates is primarily recognized as an entrepreneur and philanthropist. While he shares a close friendship with Warren Buffett, who is a renowned investor, Gates himself is not widely known for his investment activities. Nevertheless, due to his substantial wealth, being the fifth richest person globally and having held the top spot for many years, managing his financial assets is no small task.
Gates enlisted the services of Michael Larson. Over the first two decades of working with Gates, Larson achieved a commendable 11% compounded annual return. Additionally, in the last five years, Gates' publicly listed US stock portfolio has outperformed the returns of the S&P 500 by 55%.
Within the portfolio of 22 stocks, the top 4 stocks hold a significant weightage, accounting for 81.2% of the total. This concentrated approach bears resemblance to Buffett's investment style, which focuses on a few key holdings.
Now, let's examine the specific top 4 stocks in Gates' portfolio. At the end of this post, I will share a spreadsheet with comprehensive fundamental data for all 22 stocks, available for download.
#1 Microsoft (MSFT) 31%
At the top spot in Gates' portfolio is Microsoft (MSFT) with a significant 31% weightage. This comes as no surprise since Gates is the founder of the company and holds a substantial stake currently valued at $11.3 billion. Under the leadership of CEO Satya Nadella, Microsoft has performed remarkably well and currently stands as the world's second-largest company by market capitalization. With its promising trajectory, it is even projected to become the next $3 trillion company.
Given the substantial weightage of Microsoft in the portfolio and its outstanding 5-year return of 243%, the company serves as the primary driver of performance in Gates' stocks portfolio.
#2 Canadian National Railway (CNI) 17.7%
The second prominent holding in Gates' portfolio is Canadian National Railway (CNI), representing a substantial 17.7% weightage. Interestingly, Gates entered the railway business before Buffett, as he acquired Canadian National Railway in 2002, whereas Buffett invested in BNSF in 2009. The duo probably exchanged investment notes.
It's worth noting that both Canadian National Railway and BNSF are freight networks, primarily focusing on transporting goods rather than passenger services. Over the past 5 years, Canadian National Railway has demonstrated strong performance, with a notable 44% increase in value.
#3 Berkshire Hathaway (BRK.B) 16.7%
The third significant holding in Gates' portfolio is Berkshire Hathaway (BRK.B), which accounts for 16.7% of the total. Gates' close friendship with Buffett is evident through his investment in Berkshire Hathaway, making it one of the top stocks in his portfolio. Interestingly, while Gates invested in Buffett's company, Buffett opted to invest in Apple instead of Microsoft.
In a generous act, Buffett returned the favor by donating a majority of his wealth to the Bill and Melinda Gates Foundation. Over the past 5 years, Berkshire Hathaway has performed well, showing a notable gain of 77% in value.