Forget Microsoft: Gates is Bullish on John Deere, Trash Removal

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Bill Gates participates in a media availability on agricultural research, Thursday, March 13, 201, on Capitol Hill in Washington.

Image: Susan Walsh)/Associated Press

By Todd Wasserman2014-05-05 19:13:10 UTC

Bill Gates has perhaps the most enviable problem in the world: No matter how much money he gives away, he’s still the richest man on the planet.

Though Gates has vied with Mexico’s Carlos Slim in recent years for the title, the former once again became the world’s wealthiest man last May with a fortune of $72.1 billion. If he had never given a dime to charity, then the amount would be $100 billion, making him the first centi-billionaire, at least in U.S. dollars. (The latest estimate is $76 billion, according to Forbes.)

Gains in Microsoft’s stock price have helped Gates’ fortune, but that’s just part of the story. As of last week, Gates is no longer Microsoft’s largest stockholder; former CEO Steve Ballmer is. Both men now control about 4% of the company’s outstanding shares, though Ballmer owns slightly more.

See also: Bill Gates: Food Is Ripe for Innovation

By 2018, Gates will have no shares left in Microsoft at all, if he sticks to a pre-set trading plan that he has followed for the last 12 years. That plan calls for a sale of 20 million Microsoft shares every quarter.

Despite his dwindling stake in Microsoft and his billions of dollars in philanthropic giveaways, how does Gates retain earth’s biggest fortune?

Microsoft's Early Days

Gates and Paul Allen founded Microsoft in 1975. Since Allen was working at Micro Instrumentation and Telemetry Systems, maker of the Altair BASIC, and Gates was full-time at Microsoft, he reasoned that he should get a bigger stake in the company.

In 1986, when Microsoft went public, Gates’ share was 49.2% vs. 28% for Allen.

Gates sold $1.6 million shares at the time of the IPO and then kept a stake which was worth $350 million at the time. By 1990, Gates’ fortune was valued at $2.8 billion as the company’s stock price jumped 10-fold to $70.

In the 1990s, Gates began unloading shares in Microsoft. In 1999, his share was just 18.5%, which was worth $76 billion at the time. By that point, Gates had rolled $11.5 billion into Cascade Investments, his personal fund, and another $6.5 billion into his various philanthropic organizations, including The Bill & Melinda Gates Foundation.

Cascade Investments

By 2013, only about 17% of Gates’ fortune was tied up in Microsoft stock. Most of the rest was held by the Kirkland, Washington-based Cascade Investment, his own investment firm. As The Motley Fool recently reported, Cascade’s largest holdings are the Canadian National Railway, of which Gates owns a stake worth about $5 billion. Next is Republic Services, a waste disposal firm in which Gates has a position worth another $3 billion or so. Other investments: Ecolab, a global manufacturer of sanitary products ($3 billion) and Deere and Co., maker of John Deere tractors ($2.7 billion.)

Gates’ money manager, Michael Larson, has described himself as the opposite of a risk-taker, which explains the non-flashy, non-tech nature of the investments. (And may also reveal some common ground in investment philosophy between Gates and his good friend, Warren Buffett.)

Despite the buy-and-hold philosophy, much of the the investments aren’t built to last forever. Gates and wife Melinda have pledged to give away $60 billion, which, going by the current figure, should still leave them with a sizable fortune.

Topics: bill gates, Business, Microsoft, Steve Ballmer