Bill Gates recently reclaimed his number one position as the world’s richest person and extended his lead over Carlos Slim with $72.9 billion in net worth as of May 28, 2013. This lead was driven by several of Bill Gates’ major holdings, including the ones controlled through his investment vehicle Cascade Investment LLC, such as Microsoft Corporation (NASDAQ:MSFT), Ecolab Inc. (NYSE:ECL), and Republic Services, Inc. (NYSE:RSG).
As seen from the chart below, Microsoft Corporaiton (NASDAQ:MSFT) has gained 31.11%, while Ecolab Inc. (NYSE:ECL) and Republic Services, Inc. (NYSE:RSG) have advanced 21.10% and 18.19% this year, respectively. All have been outperforming S&P 500.
Bill Gates’ successful investments
Microsoft
Bill Gates’ Cascade was funded by years of Microsoft Corporation (NASDAQ:MSFT) dividends and share sales. Microsoft Corporation (NASDAQ:MSFT) had been a solid growth stock until 2003 when it started to distribute dividends and became more of a value play. Since 2003, Microsoft Corporation (NASDAQ:MSFT) has been distributing dividends consistently and currently offers an annual dividend yield of 2.63%. Despite the lack of a major breakthrough success in the Internet and social media boom, Microsoft still managed to deliver steady growth and solid cash flow.
Microsoft has had three positive earnings surprises in the last four quarters. Microsoft is making new 52-week highs and continues to provide inexpensive cash flow to its investors at a P/FCF of 14.40. As for product developments, Microsoft has been working with Nokia on the mobile end to roll out Windows phones, and the Nokia Lumia 928 was launched on Verizon Wireless.
The Lumia 925 will be also launched in the coming months globally. By expanding its offerings from more major U.S. carriers, more windows phones are expected to be sold in the U.S. market. Furthermore, by unveiling the Xbox One, which offers voice command and cloud integration and works like a universal entertainment system, Microsoft’s share should gain positive momentum. Although it may be too early for investors to feel comfortable with Microsoft in the mobile and home entertainment market, Microsoft should continue to offer solid cash flow with a solid balance sheet.
Ecolab
Ecolab Inc. (NYSE:ECL) is a leader in water, hygiene, and energy technologies and services. The company provides products and services ranging from cleaning and sanitizing to pest elimination, as well as vehicle wash. With over $12 billion in sales generated in 2012, Ecolab Inc. (NYSE:ECL) is expected to accelerate its growth by merging with Nalco to reach its goal of $20 billion in revenue by 2020.
Ecolab Inc. (NYSE:ECL) continues to deliver strong innovation and recently introduced Antimicrobial Fruit and Vegetable Treatment (AFVT), which can help reduce the risk of foodborne illness outbreaks due to ineffective produce. AVFT has earned EPA registration and FDA clearance for pathogen reduction as the industry’s first no-rinse produce wash. It is product innovations such as AFVT which make Ecolab Inc. (NYSE:ECL) an essential part of our daily lives. With over 13% revenue growth expected for 2013, Ecolab Inc. (NYSE:ECL) is on its way to reach its $20 billion sales target.
Republic Services
Republic Services, Inc. (NYSE:RSG) is the second largest provider, measured by revenue, of non-hazardous solid waste collection, transfer, recycling, and disposal services in the United States as measured by revenue. With successful vertical integration, Republic Services, Inc. (NYSE:RSG) maintains a narrow economic moat. While there are concerns that Republic Services, Inc. (NYSE:RSG)is responding slowly as Waste Management, the leading provider of comprehensive waste management services in North America, continues to evolve and expand into waste-to-energy operations and other recycling offerings, Republic Services, Inc. (NYSE:RSG) continues to improve its bottom line and reported a solid Q1.
By completing seven acquisitions for approximately $12 million, Republic Services, Inc. (NYSE:RSG) continues to execute its strategy of tuck-in acquisitions in existing markets. Republic Services remains a solid long-term investment with its steady cash flow generation.
Take away
Being one of the most well-known philanthropists in the world, Bill Gates invests with a vision to improve the quality of life for individuals and protect the earth, such as Ecolab and Republic Services. With the great advice given by Warren Buffett to the Bill and Melinda Gates foundation, “Take on really tough problems”, Bill Gates is investing just like that. So far, the results are not only impressive, but have also helped Bill Gates reclaim the number one title as the world’s richest person.
The article Solid Investments Backed by a Strong Vision originally appeared on Fool.com.
Nick Chiu has no position in any stocks mentioned. The Motley Fool recommends Republic Services. The Motley Fool owns shares of Microsoft. Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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