Bill Gates Owns 20% of His Foundation's Portfolio in This Surprising Stock – And It's Not Microsoft

Bill Gates, one of the wealthiest people in the world with a net worth of over $130 billion, always manages to be in the news. However, it's not because Microsoft is leading his portfolio; instead, it’s something else. One of the world’s largest charitable organizations, the Bill & Melinda Gates Foundation, increased its stake in Berkshire Hathaway. It's the foundation’s second-largest holding, accounting for 21.01%. This change has piqued the attention of investors and the general public.

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These aren't shares purchased on the stock exchange by the Gates Foundation–Warren Buffett personally gifted those shares to the foundation. This strategic move signifies the foundation’s strong belief in Berkshire Hathaway for long-term growth and stability. Others speculate that this might be Buffett’s final gift to the Gates Foundation, given recent reports about their cooling friendship and Buffett’s decision to cease further donations to the foundation after his demise.

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Many analysts believe the Gates Foundation will retain Berkshire shares despite the drama. It’s easy to see why, as Berkshire Hathaway offers instant diversification. Berkshire Hathaway is not just a single company; it is a conglomerate that owns many businesses. When you purchase its shares, you're buying into a little bit of everything. Property and casualty (P&C) insurers such as Geico and General Re accounted for around 40% of Berkshire’s operating profits last year. Though the insurance business can be unpredictable, the concept of ‘float’ – money held by insurance companies that have not yet been paid out in claims – gives Berkshire a unique advantage.

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Most insurance companies invest their float in safe, high-grade bonds. However, Berkshire uses it under Buffett’s tutelage to buy stocks and businesses. This strategy has proved very profitable over the years. Berkshire reported it even made an underwriting profit of $5.4 billion. That’s rare in the insurance world. Besides insurance, Berkshire includes BNSF Railway, a giant freight rail network that contributed more than 13% to its operating income last year. The company also has a stake in energy, manufacturing, retail, and construction.

There's also speculation about what will happen when 93-year-old Warren Buffett steps down from the helm. Fortunately, Buffett has put a sound succession strategy in place.

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Ajit Jain will oversee the insurance side. Greg Abel will oversee the non-insurance businesses, and two longtime lieutenants, Todd Combs and Ted Weschler, will run the investment portfolio. All these people have always worked under Buffett’s leadership, and it remains to be seen if they can take up the gauntlet.

Experts seem to agree that Berkshire Hathaway is a good investment. It may not be cheap by traditional metrics, but it has a proven and long-standing track record of creating value. Many believe Berkshire will remain a strong choice for long-term investors, including billionaires like Bill Gates.

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