In this article, we will be taking a look at the 5 methods how to preserve your wealth according to Bill Gates’ Portfolio. To delve deeper into these insights, you can directly review How to Preserve Your Wealth According to Bill Gates’ Portfolio.
5. Basic Materials
Sector Weighting in Q2 2023: 2.32%
The basic materials sectors are made up of businesses that discover, develop, and process raw materials. It includes companies engaged in mining and metal refining and those dealing in chemical and forestry products.
The segment has been a buzz of activity following the opening of the global economy after the COVID-19 pandemic. Nevertheless, the industry is cyclical and highly susceptible to economic changes. Whenever economic conditions weaken, demand for basic materials declines, affecting material producers’ profitability.
The Bill and Melinda Foundation holds stakes worth $974.16 million in Ecolab Inc. (NYSE:ECL), which provides water treatment, waste management, pest control, and other products. The hedge fund initially acquired a position in the stock during the third quarter of 2012.
4. Consumer Defensive
Sector Weighting in Q2 2023: 3.02%
The consumer defensive market segment mainly comprises companies that manufacture food, beverages, household, and personal products. It also includes companies that provide services such as education and training services.
The constant demand for their products ensures they fare well even when the economy or market is struggling. In some cases, such companies are immune to depressed economic situations as people must still consume their products or services.
Bill Gates has always invested in defensive stocks because they can generate consistent dividends and stable earrings regardless of the overall stock market. Walmart Inc. (NYSE: W.M.T.) is one of the defensive stocks in Gates and holds substantial stakes as the company operates hypermarkets, discount stores, grocery stores, and an e-commerce platform. The company is also a dividend aristocrat with a 34-year history.
The billionaire philanthropist also has some exposure to Coca-Cola FEMSA, S.A.B. de C.V. (NYSE: K.O.F.), a company that manufactures nonalcoholic drinks. Hormel Foods Corporation (NYSE: H.R.L.), a company that develops processes and distributes meat nits and food products, also accounts for a big share of the portfolio. The Kraft Heinz Company (NASDAQ: K.H.C.) is another consumer defensive company that manufactures and markets food and beverage products in which Gates has bought stakes to preserve his wealth.
3. Financial Services
Sector Weighting in Q2 2023: 20.38%
Financial services are a sector that includes firms and institutions that offer financial products and services to businesses and consumers. The segment comprises banks, investment companies, insurance companies, and real estate firms.
A good number of firms and companies in the segment generate revenues from mortgages and loans. Likewise, performance in the overall segment is highly dependent on the economy’s health. The stronger and healthier the economy, the more money that financial services generate owing to the high demand for loans, mortgages, and insurance products
Bill and Melinda Foundation has sought to expand access to digital financials evoked in the world’s poorest people. The foundation works with partners to support public and private digital payment infrastructure investments.
In addition, Gates also boasts of a massive investment in Berkshire Hathaway Inc. (NYSE:BRK-A), investments he has used to preserve his wealth over the years.
The diversified nature of the company, with stakes in financial services, energy, and consumer discretionary, has often panned out to be a solid investment.
Berkshire Hathaway is the third largest individual holding of the Gates investment portfolio owing to Gates’ strong ties and relationship with Buffett. Stakes in the holding company were worth $6 billion in the first quarter of 2023. He increased his stake in the company by 28% in the second quarter of 2023.
2. Technology
Sector Weighting in Q2 2023: 31.79%
The Technology market segment is made up of companies that design, manufacture, and distribute electronic devices such as computers, computer-related equipment, computer services, and software. It also includes companies that work on scientific instruments and electronic components.
Given the brisk nature of innovation in the industry, there is usually extensive investment in research and development as companies seek to come up with new products and services. Therefore, the industry is made up of engineers and highly skilled technicians relative to other sectors.
Bill Gates has often turned to the tech industry to preserve his wealth, having made a fortune in the segment. His biggest investment in the segment has to be that of Microsoft, a software giant he helped found. He still holds about a 1.3% stake in the company, valued at billions of dollars.
Previously, Gates also held stakes in Apple Inc. (NASDAQ:AAPL), another tech giant best known for developing smartphone computers, among other hardware and services. His investment in the company date back to 1997, when he invested $150 million to offer support to the iPhone maker, which was struggling at the time.
1. Industrials
Sector Weighting in Q2 2023: 40.33%
The industrial segment involves companies that produce and provide goods and services to various industries. It involves companies with construction, transportation, energy, and waste management operations. Industrial is one of the segments that Gates has always turned to to preserve and grow his wealth.
Industrial stocks have always generated solid returns on performing well whenever the economy is doing well and growing at an impressive rate. The segment has been on a roll in the past three years, all but generating significant reruns for Gates and investors alike.
Industrials have mostly benefited from the recovery from the COVID-19 pandemic, which has seen a significant increase in demand for industrial products and services. Increased spending by the U.S. government and other nations in the race to accelerate the economy has also benefited industrial companies. The U.S. government’s $5B infrastructure spending plan is expected to create more opportunities that should see most companies benefit.
Some of the Industrial plays that Gates has significant stakes in include Caterpillar, a leading construction and mining equipment manufacturer. He is also a big investor in Deere & Company (NYSE: D.E.), a Company that manufactures agricultural and construction equipment engines and dive trains, and Anheuser-Busch Inbred SA/NV, the world’s largest brewer.
The billionaire investor also owns stakes worth about $6.4 billion in Canadian National Railway Company and stakes in Waste Management, Inc. (NYSE: W.M.), which operates waste removal and recycling services.
Gates also holds stakes in FedEx Corporation (NYSE: F.D.X.), which provides U.S. transportation, e-commerce, and business services. Waste Connections is another stock in which Gates has significant stakes.
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