Is Bill Gates, the Billionaire, Bullish on Berkshire Hathaway's Shares as an Investment?
Bill Gates, the co-founder of Microsoft, has a significant portion of his wealth tied up in his charitable foundation's holdings, which are publicly visible. Among these holdings, the foundation has a substantial stake in Warren Buffett's company, Berkshire Hathaway.
For quite some time, the foundation has owned shares of Berkshire Hathaway's holding company. However, what might surprise you is the extent of this investment in a single business.
Gates Places Billions on Berkshire Hathaway
Bill Gates is no stranger to Warren Buffett's investment ideas. They've been close friends for decades, with their friendship built upon shared experiences. In 1995, they even visited a McDonald's together, and Gates recounted their laughter years later.
"Remember the time we visited a McDonald's in Hong Kong and decided to have lunch there?" Gates reminisced with Buffett in 2017. "You offered to pay, dug into your pocket, and pulled out coupons! It showed how much you value a good deal."
This anecdote reveals the deep respect that Gates has for Buffett, a respect that's been cultivated over the years. And it's evident that Gates has learned a thing or two about securing a good deal from Buffett.
Perhaps this is why the Bill & Melinda Gates Foundation holds Berkshire as its second-largest investment, behind only Microsoft. As of the latest records, the foundation holds approximately 24.6 million shares of Berkshire, valued at around $10 billion, making up 21% of its total portfolio.
Last quarter, the foundation even increased its Berkshire investment by purchasing about 7.3 million additional shares. This purchase pushed the foundation's ownership of Berkshire to over 1% of the company's total outstanding stock.
Gates clearly has faith in Berkshire. And if you ask me, you should too. If you agree with Gates and Buffett's investment strategy, it might be wise to add more of Berkshire stock to your own portfolio.
Two Reasons to Invest in Berkshire Stock Like Gates and Buffett
I believe the foundation increased its Berkshire investment by 7.3 million shares for two reasons. If you share these reasons, it might be time to consider adding more Berkshire stock to your portfolio.
First, the market is expensive. No one can predict the market's short-term direction, but the S&P 500 trading for over 30 times earnings has many experts, including Buffett, concerned.
Berkshire currently has a large cash reserve, and Buffett doesn't seem too anxious about putting it to use. By purchasing Berkshire stock, you're not only investing in a strong company with capable managers but also improving your chances of earning money if the market falls.
With a cash position of over $200 billion, Buffett is well-positioned to buy large positions at a discount if a bear market arrives. Berkshire stock might still experience temporary losses in such a situation, but the company is well-equipped to adjust its portfolio for the next decade if a crash occurs.
The second reason to buy Berkshire stock right now is that, even if the market continues to rise, the company has proven to be a reliable investment. Berkshire's market cap is currently around $1 trillion, with a significant portion tied up in low-interest cash. And yet, over the past three years, Berkshire's return has been nearly double that of the S&P 500.
Berkshire's investment strategy, which involves diversified, decentralized investing with a global portfolio, allows it to invest during every market cycle. Its insurance businesses, for example, produce investable excess cash even during bear markets.
And Buffett and his team have an impressive track record of using this cash wisely, even in the face of odds stacked against them due to Berkshire's size.
There's a lot to admire about Berkshire, whether the market heads higher or lower in the coming months and years. If you're a patient, long-term investor like Gates, now is a great time to add more of the company's shares to your portfolio.
- Given Bill Gates' significant investment in Berkshire Hathaway through the Bill & Melinda Gates Foundation, it might be prudent for individuals interested in finance and investing to consider following his lead and adding Berkshire stock to their own portfolios.
- While discussing the reasons behind the foundation's increased investment in Berkshire Hathaway, it's worth noting that Gates, like Buffett, recognizes the potential value of investing in a financially sound company during periods of market volatility, demonstrating a strategic approach to money management.
