Bill Gates Stock Portfolio: Latest 2024 Update

4. Canadian National Railway Company (NYSE:CNI)

Bill & Melinda Gates Foundation’s Investment Stake: $6.4 billion

Number of Hedge Fund Investors In Q3 2024: 44

Canadian National Railway Company (NYSE:CNI) is a diversified Canadian logistics company that provides rail and road-based transportation services to industries. The firm’s revenue is neatly divided across a variety of sub-sectors such as automotive, metals, coal, petroleum, and agriculture. Yet, since Canadian National Railway Company (NYSE:CNI) caters exclusively to the industrial sector, it also depends on heightened economic activity for prosperity. Consequently, the fact that the firm’s shares are down 14.9% year-to-date is unsurprising. However, as Canadian National Railway Company (NYSE:CNI) is one of the biggest firms of its kind (as evidenced by its 20,000 route-miles of track),  the firm can benefit from significant tailwinds once the North American economy kicks into high gear.

Appalaches Capital mentioned Canadian National Railway Company (NYSE:CNI) in its Q3 2024 investor letter. Here is what the fund said:

“During the quarter, we established core positions in two railroads: Canadian National Railway Company (NYSE:CNI) and CSX Corporation (CSX). The investment thesis is simple. Domestic railroads have not seen volume growth over the last 20 years despite being the cheapest, cleanest, and safest form of freight transportation.4 The lack of volume growth and related share losses to trucking is due to the poor reliability of the networks. However, there is strong evidence to believe that this may not be the case going forward. It seems that investors are overweighting historical characteristics of the industry and not giving credit to recent and sustainable improvements in service metrics. If the rails are able to show any sign of sustained volume growth, our investment should perform very well.

The Canadian railroads have more or less operated at full capacity over the last two decades, while the U.S. networks have not. Why is that? There are a few reasons for the anemic volume growth domestically, but only one of which is not shared by the Canadian railroads: service. In 2017, had you shipped goods by rail in Canada, the odds that your shipment would arrive on time, or the “trip plan compliance” rate, was around 90% or higher. In the U.S., these levels were closer to 50%.5 Maybe you have a different opinion, but I am not particularly excited about using a shipping service that only has a coin flip’s chance of arriving on time, even if it may be more economical…” (Click here to read the full text)