The Bill & Melinda Gates Foundation was started as a means to improve the lives of millions of people around the globe with the trust’s namesakes Bill Gates and Melinda Gates, along with billionaire investor Warren Buffett contributing actively towards the foundation. Buffett’s Berkshire Hathaway is a major contributor to the trust, having donated shares to it over the last ten years totaling in excess of $11 billion. Michael Larson is the investment manager of the foundation, and according to its recent 13F filing with the SEC, the foundation had $17.02 billion worth of holdings in its public equity portfolio. Its holdings are most heavily concentrated in finance, dominated by the donations from Buffett, whose holding company Berkshire Hathaway Inc. (NYSE:BRK.B) ranks as the top holding of the trust. Canadian National Railway (USA) (NYSE:CNI) and Caterpillar Inc. (NYSE:CAT) are the other top equity investments of the Bill & Melinda Gates Foundation, and we’ll look at all three positions in this article.
We don’t just track the latest moves of funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research, with backtests for the period between 1999 and 2012 and forward testing for the last 2.5 years. The results of our analysis show that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests. Moreover, since the beginning of forward testing in August 2012, the strategy worked brilliantly, outperforming the market every year and returning 118%, which is more than 60 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
Follow Michael Larson's Bill & Melinda Gates Foundation Trust
The Bill & Melinda Gates Foundation announced a sales plan for their shares of Berkshire Hathaway Inc. (NYSE:BRK.B) in January 2014 and in following the directive of that plan, the trust has disposed of 5.0 million shares of the holding company’s shares in the second quarter, with its remaining holdings amounting to 68.63 million shares valued at $9.34 billion. The Class A shares of Berkshire Hathaway are the most expensive shares in the world, with a share price of $213,300. Berkshire Hathaway Inc. (NYSE:BRK.B) is a holding company with subsidiaries that operate in different sectors. Some of its primary businesses include insurance, freight rail transportation, utilities, and energy generation. Eagle Capital Management, led by Boykin Curry, is the largest stakeholder of the company in our portfolio, holding 10.34 million class B shares of Berkshire Hathaway Inc. When talking about hedge funds that have slashed their positions in the company, Jim Simons’ Renaissance Technologies comes on top, as the hedge fund sold 374,300 shares of Berkshire Hathaway Inc. (NYSE:BRK.B), giving it a position worth $137.68 million from ownership of 1.01 million shares.
Canadian National Railway (USA) (NYSE:CNI) comes at number two in the equity portfolio of the foundation, which holds 17.13 million shares valued at $989.08 million as of June 30. The rail transportation company has a rail route of 20,000 miles spread across Canada and mid-America. Canadian National Railway is one of the most preferred stocks in the railroad industry, considering that it has increased its dividend for the last 19 years. Canadian National Railway (USA) (NYSE:CNI) announced a third quarter 2015 dividend of $0.24, which will be paid on September 30 to shareholders of record on September 9. The shares of the railway transportation company are down by 11.91% year-to-date, although there has been an improvement of 1.75% since its second quarter results were released on July 20. D. E. Shaw, founded by David E. Shaw, is the largest shareholder of Canadian National Railway (USA) (NYSE:CNI) in our portfolio, owning 1.87 million shares valued at $107.60 million.
The Bill & Melinda Gates Foundation’s third largest investment is in Caterpillar Inc. (NYSE:CAT), consisting of 11.26 million shares with a market value of $955.15 million. The shares of the heavy-equipment maker are down by 14.87% year-to-date. A weaker Chinese economy and a slump in the oil industry has had a negative impact on Caterpillar Inc. (NYSE:CAT), with the weakness in crude oil and commodity prices affecting the sales coming out of its resource industries division. Caterpillar provides diesel and natural gas engines for the mining and exploration of crude oil. A strong US dollar has posed challenging for the company over the past several months as well. Caterpillar Inc. (NYSE:CAT) reported stronger-than-expected second quarter results with earnings per share of $1.27 against market estimates of $1.25, although its reported revenue of $12.3 billion was short of analysts’ estimates of $12.6 billion. On a year-over-year basis, the revenue was down by 13.0% and the company issued a lower annual revenue guidance of $49.0 billion against previous guidance of $50.0 billion. Harris Associates is one of the top stockholders of Caterpillar Inc. (NYSE:CAT) that we track, with 11.49 million shares valued at $974.78 million.
Disclosure: None
