Some of the biggest holdings in tech billionaires’ portfolios might surprise you.
Bill Gates is one of the world’s most famous billionaires.
of Microsoft (MSFT 1.47%) The founder became the first $10 billionaire in 1999, decades before anyone else reached that level of wealth. His net worth is still well over $100 billion today, despite donating billions to charities and non-profits over the past 25 years. Most of his donations go to the Bill & Melinda Gates Foundation, which aims to improve healthcare and reduce poverty around the world.
Gates isn’t the only billionaire funding the nonprofit. Warren Buffett has also pledged to the foundation since 2006, but his contributions will end after his death. Buffett also served as a trustee until 2021.
The foundation’s trust currently contains a stock portfolio worth about $46 billion, but more than two-thirds of it, about 68%, is invested in just three stocks.
1. Microsoft (37%)
It’s probably not all that surprising that Microsoft has a sizable stake in the Bill & Melinda Gates Foundation Trust: Bill Gates founded the company in 1975 and remains one of its largest individual shareholders, despite donating or selling millions of shares worth tens of billions of dollars.
Gates is expected to give away $20 billion in 2022, most of which will come in the form of Microsoft stock. The trust’s stock count grew by more than 38 million shares that year. As of this writing, it currently holds about 36.5 million shares, valued at nearly $16.8 billion.
The Gates Foundation gets to hold most of those shares, and the rewards are big: Microsoft shares have risen more than 63% since the end of July 2022, thanks to rising demand for artificial intelligence.
Microsoft has become a leader in AI, thanks in part to its investment in ChatGPT developer OpenAI, which is adding $10 billion in investments in early 2023, positioning it as the first choice for developers looking to use the public cloud to train and deploy AI-powered applications. AI-related services helped drive a 31% increase in the company’s Azure cloud platform revenue in the most recent quarter, a faster growth rate than any other company in the industry.
Meanwhile, Microsoft continues to lead the way in enterprise software with its Windows operating system and Office productivity suite. The company has added enhanced AI capabilities and seen strong sales growth.
Microsoft shares trade at a premium of about 34 times forward earnings, but with long growth potential in cloud computing and AI, a cash cow in its enterprise software business, and a current cash balance, the high multiple could be worth it.
2. Waste management (16%)
Waste Management (W.M. 0.06%) Waste Management isn’t the kind of company you think of when you think of tech billionaires, but Gates is more likely influenced by Buffett than he is by Silicon Valley’s tech elite, and Waste Management is a quintessential Buffett stock.
The business is easy to understand, not at all boring, and produces steady, growing revenues. The company benefits from broad economic advantages derived from landfill ownership and route density, which allows Waste Management to raise prices faster than inflation. The company also grows through acquisitions, such as the recent purchase of Stericycle.
The company has also found ways to cut costs over the past decade: Its operating margin has risen from about 15% a decade ago to 19.4% over the past 12 months.
Gates has held Waste Management shares for a foundation trust for over a decade, doubling his holdings in 2022. The holdings have paid off: The stock’s total return over the past decade is: S&P 500.
The company’s stock is currently trading at an enterprise value-to-EBITDA ratio of about 17.25, which is in line with its nearest competitors. While that may be a bit pricey for a boring business, Waste Management has a strong position in a solid industry, and the stock price may be worth it for those looking for a stable utility.
3. Berkshire Hathaway Class B Shares (15%)
As mentioned above, Buffett has donated to the Bill & Melinda Gates Foundation for many years. The way Buffett donates his wealth is: Berkshire Hathaway Class A share (BRK.A 1.17%) In Berkshire Hathaway Class B share (BRK.B 1.33%)Then you donate your Class B shares.
The strategy allows Buffett to retain control of Berkshire Hathaway while giving away much of his wealth: He donates about 5% of his stock each year to various nonprofit organizations.
The trust’s current holdings of Berkshire Hathaway stock are actually among the least concentrated in the company. Buffett’s endowment stipulates that the foundation must spend the entire endowment and 5% of its net assets each year. In effect, Buffett is preventing the foundation from hoarding Berkshire stock. As a result, the number of shares held has steadily decreased over the past few years, even as Berkshire’s value has risen.
There are good reasons to expect Berkshire to outperform the S&P 500. First, the company is valued at a high price to the market, trading at just 18.5 times forward earnings. This is despite Buffett’s assertion that the company’s current mix of wholly and partially owned businesses offers better earnings prospects than the average U.S. company. When you consider the $189 billion in cash and Treasury bonds on Berkshire’s balance sheet, the strong free cash flow of Berkshire’s core businesses, and Buffett’s ongoing share buybacks, the valuation becomes even more attractive.
Adam Levy invests in Microsoft. The Motley Fool invests in and recommends Berkshire Hathaway and Microsoft. The Motley Fool recommends Waste Management and recommends buying January 2026 $395 calls on Microsoft and selling January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
