Billionaire Bill Gates Has 67% of His Foundation's $49 Billion Portfolio Invested in Just 3 Amazing Stocks

Bill Gates is one of the richest people in the world, but he has absolutely no intention of staying that way.

With a net worth of approximately $106 billion, Gates plans to give away at least 99% of his wealth through his charitable foundation by the end of 2045 (when he'll be 90 years old, if he's still with us). He has already given away a significant amount of it, donating billions of dollars worth of his Microsoft (NASDAQ: MSFT) shares to the foundation since he and his now-ex-wife, Melinda, founded it in 2000. In addition, Gates intends for the foundation to double its rate of spending over the next two decades as it works to fight disease and reduce poverty around the world.

The foundation's trust fund is instrumental to supporting that goal. Based on its most recent 13F filing with the Securities and Exchange Commission, the foundation's marketable equity portfolio is heavily concentrated. While it holds stakes in a couple dozen stocks, just three account for more than two-thirds of the portfolio's value.

Image source: Getty Images.

1. Microsoft (28.6%)

Despite the Gates Foundation selling a couple of million shares of the stock recently, Microsoft remained its biggest holding as of the end of the second quarter. That position largely comes from a sizable donation of nearly 39 million shares that Gates made in 2022. The trust held 26.2 million shares as of the end of the second quarter, worth $13.9 billion as of this writing.

Microsoft has undergone some significant changes since Gates stepped back from day-to-day operations in 2008. It has emerged as a leader in the generative AI space, thanks in part to its early investments in OpenAI. It was able to build a strong foundation of AI services into Azure, its cloud computing platform, and it also built generative AI functionality into its Microsoft 365 productivity suite. Both products have been instrumental in driving growth for the business.

Azure is now a $75 billion business and still growing quickly. In fact, its revenue growth accelerated throughout the last year as Microsoft worked to bring more AI-capable cloud capacity online to meet strong demand. Management has continued to note that demand outstrips supply, even as it's spending tens of billions of dollars on capital expenditures each quarter.

Meanwhile, Microsoft's cash cow, its enterprise software business, is seeing strong double-digit percentage revenue growth thanks in part to new AI features that give it the ability to charge more and retain users better. That's helping support Microsoft's massive buildout of new data centers, as it continues to generate tens of billions of dollars in free cash flow every quarter.

Investors have been rewarded with strong price appreciation, yet the stock still trades for a valuation around 34 times forward earnings estimates. Given Microsoft's strength on two fronts and incredible balance sheet and cash flow, the stock is worth the premium price.

2. Berkshire Hathaway (24.1%)

For many years, Gates' longtime friend Warren Buffett has made annual donations to the foundation in the form of Berkshire Hathaway (NYSE: BRK.B) (NYSE: BRK.A) shares. Those donations come with the stipulation that the foundation put the entire value of Buffett's annual contributions to use in the next year, and that it also spend at least 5% of its other assets. Even with that requirement, the trustees have managed to build up a solid position in Berkshire shares over time. As of the end of the second quarter, the trust held 24.1 million Class B shares, worth $11.8 billion as of this writing.

Berkshire Hathaway has produced solid results so far this year, even as its insurance business experienced some normalization after a couple of years of strong performance. Several major catastrophes (including the California wildfires) weighed on the insurance segment's results in the first half. Still, last quarter's operating earnings came in above expectations, and if you factor out changes in foreign exchange rates, the results were even better.

The conglomerate's stock portfolio has undergone some significant trimming over the last few years. Buffett has notably reduced its positions in several top holdings, and Berkshire's balance sheet holds approximately $340 billion in cash and equivalents. Its positions in cash plus liquid equities now exceed $650 billion.

Buffett and soon-to-be CEO Greg Abel were able to put some of that cash to work recently with the acquisition of OxyChem from Occidental Petroleum for $9.7 billion. The deal looks to be a great value, and Berkshire was able to keep its preferred shares of Occidental, which pay 8% per year.

Berkshire Hathaway stock now trades at a price-to-book-value ratio of around 1.6. That's a bit higher than the level at which Buffett has been willing to have the conglomerate buy back its own stock (around 1.5), but it's also based on the book value reported as of the end of the second quarter. Assuming that its book value continued to climb in the now-completed third quarter, the stock may present an attractive opportunity right now.

3. Waste Management (14.1%)

Waste Management (NYSE: WM) is a longtime holding of the Gates Foundation and a prime example of Buffett's influence on Gates as an investor. It's a "boring business" with a wide competitive moat. The trust has rarely sold shares of the stock, and it currently holds 32.2 million shares worth about $6.7 billion.

Waste Management benefits from its scale and landfill ownership. Its scale allows it to design dense routes for its trash trucks through cities, maximizing operating efficiency. It also owns the 262 landfills it uses. Between those two advantages, its core business can achieve better operating margins than smaller competitors. Importantly, its landfill ownership is unmatchable by existing or new competitors, as regulatory hurdles largely make developing new landfills impractical.

The breadth of its competitive moat was evidenced again in its third-quarter results. The company's collection and disposal business produced strong results, expanding its adjusted EBITDA margin to 38.4%. However, lower commodity prices did put a drag on its recycling business. Additionally, its recently acquired medical waste business produced disappointing sales results. Overall, however, those disappointments weren't any indication of long-term challenges for the business.

At its investor day this summer, management provided a revenue guidance range of $28.5 billion to $29.25 billion for 2027 and an adjusted EBITDA range of $8.85 billion to $9.15 billion. At the midpoints, that would amount to average annualized growth of 9% and 11%, respectively, over the next three years. That would be solid growth for the company, fueled by pricing power and operating leverage.

The company's enterprise value of $106 billion is around 14 times forward EBITDA estimates. That's a fair price to pay for a company that's growing EBITDA by around 11% per year, and certainly worth holding for the Gates Foundation trust.

Adam Levy has positions in Microsoft. The Motley Fool has positions in and recommends Berkshire Hathaway and Microsoft. The Motley Fool recommends Occidental Petroleum and WM and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.