The Gates Foundation Sold All of Its Remaining Microsoft Stock. Should Investors Be Worried?
Key Points
The Gates Foundation sold its Microsoft shares as part of a commitment to spending its entire endowment by 2045.
Microsoft's latest quarterly earnings saw revenue grow 17%.
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Recently, the Gates Foundation disclosed it sold its final 7.7 million shares of Microsoft (NASDAQ: MSFT), a position worth approximately $3.2 billion. A sale of that size raises eyebrows and perhaps causes a bit of nervous chatter among investors. Why would Bill Gates, the founder of Microsoft, have his foundation sell every last share? Is it time to panic?
Turns out, the answer is a definitive no.
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The reason for the sale isn't a bearish outlook on Microsoft; instead, it's a philanthropic pledge. The foundation is committed to spending all of its endowment by 2045 and, to do so, must liquidate its positions and spend them down accordingly. The foundation is planning to spend more than $200 billion over two decades.
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This is an important matter of fact for the company's investors. The software giant, which recently celebrated its 50th birthday, still has an incredible business with a strong competitive moat. In its most recent quarterly report, Microsoft saw revenue increase 18% to $82.9 billion. Its diluted earnings per share and net income both grew even faster at 23%.
Microsoft stock is down about 13% year to date as of this writing, but the company is still worth buying and holding for the long term. If anything, this has made Microsoft's valuation metrics far more appealing, and now may be a good time to start a position.
Should you buy stock in Microsoft right now?
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.
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