The Bill and Melinda Gates Foundation’s Stock Picks Include Berkshire Hathaway Inc. (BRK.B)

According to the 13F, the trust owned 9.9 million shares of McDonald’s Corporation (NYSE:MCD) at the beginning o April of this year. The market leader in quick service restaurants trades at a small discount to most of the rest of its industry at a trailing P/E of 19. McDonalds, however, has more limited growth prospects than many of its peers and has seen very little change in either sales or net income according to recent reports. And while that valuation is low for the industry, it certainly would not be considered value territory on an absolute basis.

Another troubled company among the Gates Foundation’s stock picks is equipment company Caterpillar Inc. (NYSE:CAT). Famed short seller Jim Chanos recently recommended it as a short on the company’s exposure to mining equipment capital expenditures, claiming that the mining boom is coming to an end and that capex in the industry will collapse. Caterpillar has in fact been seeing a decline in both revenue and earnings from their levels a year ago, and with a trailing P/E of 12 the market- for better or for worse- seems to expect flat performance going forward.

Perhaps these stocks were good long term picks when the trust bought them, and perhaps they will turn around over a period of several years, but right now they generally don’t seem attractive given recent results. The consumer stocks feature high earnings multiples and flat results, while investors could certainly have concerns about Caterpillar’s ability to sustain current results. Berkshire Hathaway Inc. (NYSE:BRK.B) may be bid up above attractive prices as well, in addition to uncertainty regarding the skill of the holding company’s future management.

Disclosure: I own no shares of any stocks mentioned in this article.