5 Stocks to Buy and Hold According to Bill Gates

3. Caterpillar Inc. (NYSE:CAT)

Number of Hedge Fund Holders: 46 

In the filings for the third quarter, Bill Gates’ fund detailed that it owned over 9.6 million shares of Caterpillar Inc. (NYSE:CAT) worth $1.8 billion, representing 8.01% of the portfolio. The firm makes and sells construction and mining equipment. It has been present in the Gates’ portfolio for nearly nine years. 

Caterpillar Inc. (NYSE:CAT) recently signed an MoU with BNSF Railway Company and Chevron to advance the demonstration of a locomotive powered by hydrogen fuel cells. The project is presently in the feasibility stage. 

Among the hedge funds being tracked by Insider Monkey, Washington-based firm Bill & Melinda Gates Foundation Trust is a leading shareholder in Caterpillar Inc. (NYSE:CAT) with 9.6 million shares worth more than $1.8 billion. 

In its Q2 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Caterpillar Inc. (NYSE:CAT) was one of them. Here is what the fund said:

“Having followed the company closely for north of a decade, Caterpillar is a name we know well. For much of its history, the operating efficiency of the company left much to be desired, but its underlying competitive position was rarely in doubt. A series of actions over the past decade (e.g., LEAN implementation, improved service mix, optimized manufacturing footprint) helped to narrow the gap between Caterpillar’s potential and its realized results, driving material margin expansion and strong share price performance. In our view, the company remains among the highest quality industrials in the market, but its underlying business is cyclical, which can translate to large swings in both performance and investor sentiment over short time periods. Our ability to focus on the long-term, sustainable earnings power of a business (rather than getting distracted by near-term fluctuations) is our most significant edge when investing in cyclical businesses. Due to the inherent volatility in Caterpillar’s end markets and operating performance, we suspect we’ll have a future opportunity to own this high-quality business at a more attractive price once the cycle turns and today’s enthusiasm wears off.”