Bill & Melinda Gates Foundation Trust’s Top Holdings Deliver Solid Returns

Michael Larson is one of the most powerful persons when it comes to wealth management. Not only does he manage the wealth of Bill Gates, who is the richest man in the world, but he also takes care of the investment portfolio of Bill & Melinda Gates Foundation Trust, being its Chief Investment Officer.

Let’s look Bill & Melinda Gates Foundation Trust’s at the top five holdings at the end of the second quarter, which include Berkshire Hathaway Inc. (NYSE:BRK.A), Waste Management, Inc. (NYSE:WM), Canadian National Railway (USA) (NYSE:CNI), Caterpillar Inc. (NYSE:CAT), and Wal-Mart Stores, Inc. (NYSE:WMT).

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Berkshire Hathaway Inc. (NYSE:BRK.A)

– Shares Owned by Bill & Melinda Gates Foundation Trust (as of June 30): 64.38 million

– Value of Bill & Melinda Gates Foundation Trust holding (as of June 30): $9.32 billion

Bill & Melinda Gates Foundation Trust’s top holding was represented by Berkshire Hathaway Inc. (NYSE:BRK.A). The trust reduced its stake in the company to 64.38 million shares from 69.38 million shares during the second quarter. The value of the holding amounted to $9.32 billion at the end of June and amassed over 57% of the Trust’s equity portfolio. Berkshire’s class A stock has appreciated by 14% since the beginning of 2016.Earlier this year, Berkshire Hathaway Inc. (NYSE:BRK.A)’s top manager Ajit Jain had taken charge of the reinsurance business and recently has asked employees to cut down on costs related to General Re as he was not satisfied by the ratio of expenses to premiums. Among other suggestions given by Mr. Jain was reducing hierarchy to three from six, cutting of travel and entertainment related expenses along with “gradual creep of corporate bureaucracy.” Re-insurance is one of the key verticals for Berkshire Hathaway Inc. (NYSE:BRK.A) as the company continues to make billions.  A total of 78 funds tracked by us were long Berkshire Hathaway Inc. (NYSE:BRK.A) at the end of June.

Waste Management, Inc. (NYSE:WM)

– Shares Owned by Bill & Melinda Gates Foundation Trust (as of June 30): 18.63 million

– Value of Bill & Melinda Gates Foundation Trust holding (as of June 30): $1.23 billion

Bill & Melinda Gates Foundation Trust’s position in Waste Management, Inc. (NYSE:WM) was unchanged over the second quarter and, at the end of June, it held 18.63 million shares valued at at $1.23 billion. For the second quarter, Waste Management, Inc. (NYSE:WM) reported revenues of $3.43 billion topping expectations by $30 million, while EPS of $0.74 was higher than the expected $0.71. The company’s President and CEO David P. Steiner stated that the commercial collection volumes turned positive for the first time since 2005. In addition, Waste Management was also able to reduce its operating costs as a percentage of revenue by 300 basis points. The hedge fund interest towards Waste Management, Inc. (NYSE:WM) has increased during the second quarter, as 34 funds tracked by us held long positions at the end of June, compared to 28 a quarter earlier.

Canadian National Railway (USA) (NYSE:CNI)

– Shares Owned by Bill & Melinda Gates Foundation Trust (as of June 30): 17.13 million

– Value of Bill & Melinda Gates Foundation Trust holding (as of June 30): $1.01 billion

Bill & Melinda Gates Foundation Trust’s position remained neutral in rail and transport business related Canadian National Railway (USA) (NYSE:CNI). The trust holds 17.13 million shares worth $1.01 billion. The company reported revenue of C$2.84 billion ($2.21 billion) topping expectations by C$580 million, while EPS of C$1.11 was higher compared to C$0.04 expected by analysts for the second quarter. The company provided diluted EPS guidance of C$4.44 for the full 2016. Canadian National Railway (USA) (NYSE:CNI)’s stock has gained nearly 14% since the beginning of the year. Among the funds tracked by our team, 21 investors are long Canadian National Railway (USA) (NYSE:CNI) as of the end of June.

Caterpillar Inc. (NYSE:CAT)

– Shares Owned by Bill & Melinda Gates Foundation Trust (as of June 30): 11.26 million

– Value of Bill & Melinda Gates Foundation Trust holding (as of June 30): $853.69 million

The fourth-largest position in Bill & Melinda Gates Foundation Trust’s 13F portfolio is represented by Caterpillar Inc. (NYSE:CAT), in which it holds 11.26 million shares worth $853.69 million. Recently, Ritchie Bros. Auctioneers (USA) (NYSE:RBA) and Caterpillar Inc. (NYSE:CAT) have entered into a material agreement which is expected to benefit both companies. As part of the agreement, Ritchie Bros. Auctioneers (USA) will be the preferred partner for latter’s online auctions and live onsite events. Caterpillar Inc. (NYSE:CAT)’s stock has advanced by more than 20% since the beginning of the year and it saw 31 funds from our database holding shares at the end of June, down from 37 a quarter earlier.

Wal-Mart Stores, Inc. (NYSE:WMT)

– Shares Owned by Bill & Melinda Gates Foundation Trust (as of June 30): 11.60 million

– Value of Bill & Melinda Gates Foundation Trust holding (as of June 30): $847.25 million

Finally, there is Wal-Mart Stores, Inc. (NYSE:WMT), in which the trust reported a $847.25 million position that contained 11.60 million shares at the end of June. Wal-Mart Stores, Inc. (NYSE:WMT) reported second-quarter revenue of $120.9 billion, which beat the consensus estimate by $740 million, while EPS of $1.07 topped the expectations by $0.05. The retailer’s U.S. comparable-store sales saw an increase of 1.6% during the quarter, versus estimates of 0.9%. Shares of Wal-Mart Stores have gained 19% so far this year. A total of 58 funds from our database held $6.87 billion worth of the company’s stock heading into the third quarter.

Disclosure: None