Bill Gates' Foundation Holds Berkshire Hathaway as Its Top Stock, a Signal of Its Preference for Steady Compounders Over Flashy Tech

The Gates Foundation Trust has Microsoft's co-founder and former CEO, Bill Gates, serving as its trustee. Notably, while he made his fortune by turning Microsoft into one of the biggest tech companies on the planet, the foundation he began largely eschews the tech sector in favor of stocks of industrial and consumer companies.

The Gates Foundation Trust's investment portfolio is detailed in its quarterly Form 13F filings with the Securities and Exchange Commission (SEC), providing investors with insight into which companies Gates values most. Should you take a cue from the foundation and rely less on tech and more on industrial and consumer stocks for your own portfolio?

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The foundation's holdings

The Gates Foundation holds 24 equities valued at $34.4 billion as of June 30. Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) Class B shares make up the largest share, about $7.4 billion. That's due to the company's former CEO, Warren Buffett, who previously donated a large portion of his stock. The Gates Foundation trimmed its Berkshire stake by about 2.4 million shares in the second quarter, but still holds 14.7 million shares.

Its next four largest stock holdings belong to the industrials sector. These are Caterpillar (NYSE: CAT), Canadian National Railway, Waste Management, and Deere. They had values ranging from $2.3 billion to $6.8 billion.

The foundation also owns consumer goods companies like Walmart, Home Depot, and McDonald's. Notably, the foundation initiated its Home Depot position in the second quarter by purchasing 1 million shares, valued at over $350 million as of June 30.

Should you follow the trust's lead?

Technology stocks can be flashy, but volatile. While they've been known to deliver outsize gains, only a few, such as Microsoft, have done well over the long term. That's because technology changes very fast.

Investors have been drawn to tech stocks lately, with excitement surrounding generative artificial intelligence (AI). The S&P 500 information technology sector gained 20% this year, versus a 12% gain for the broader S&P 500.

Still, it's difficult for investors to separate long-term winners from those that will fade away. While AI will undoubtedly continue to change people's lives, which companies will stand out and generate long-term profits remains a mystery.

The Gates Foundation's second-largest holding, Caterpillar, has proven its staying power, profiting despite cyclical downturns in the construction and mining markets. The company celebrated its 100th anniversary last year.

Shares are up an impressive 44% so far this year, with much of the gains attributed to data center construction needed to support the growth of artificial intelligence. Caterpillar's second-quarter top line grew 24% year over year to $20.5 billion.

To top it off, Caterpillar recently increased its dividend by 8% to $1.63 per quarter, yielding 0.8%. Caterpillar has raised its dividend annually for the last 32 years.

Through its holdings, the Gates Foundation provides evidence that it's possible to create a solid portfolio without relying on tech -- and with a steady growth company like Caterpillar, you can even get the benefit of the AI boom without investing directly in a tech company.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Caterpillar, Deere & Company , Home Depot, Microsoft, and Walmart. The Motley Fool recommends Canadian National Railway and WM and recommends the following options: long January 2028 $320 calls on McDonald's and short January 2028 $340 calls on McDonald's. The Motley Fool has a disclosure policy.