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As of the fourth quarter, the Bill and Melinda Gates (BMG) Foundation Trust had $42 billion invested in 24 stocks; however, 34% of that total was concentrated in two holdings: 17% in Berkshire Hathaway (NYSE: BRK.A) and 14% in Microsoft (NASDAQ: MSFT).
The BMG Foundation Trust is notable since it returned 41% over the three years that concluded in December 2023. In the same period, the S&P 500 (SNPINDEX: \GSPC) returned a mere 33%. The main holdings in the BMG Foundation Trust account for a considerable portion of its outperformance.
Over the past three years, Microsoft and Berkshire have shown to be excellent investments, yielding returns of 74% and 54%, respectively. An investor should be aware of the following with those stocks.
34% of the Bill and Melinda Gates Foundation Trust is owned by Microsoft.
Microsoft released third-quarter financial figures that exceeded both the top and bottom lines of Wall Street’s projections. The demand for artificial intelligence (AI) solutions contributed to a notable 17% increase in revenue to $61.9 billion, mostly driven by growth in sales of cloud services and corporate software. In the meantime, stock buybacks and strict expense control caused GAAP net income to soar 20% to $2.94 per diluted share.
Moving forward, Microsoft’s strongholds in cloud computing and enterprise software will be key components of its bull case. More specifically, Morgan Stanley projects that Microsoft will have a market share of more than 21% by 2027, having accounted for 18% of sales of commercial software in 2023. The basis of its supremacy is its robust position in business resource planning and office productivity software, while its recent
When it comes to cloud infrastructure and platform services income, Microsoft Azure still lags behind Amazon Web Services (AWS). But Azure’s market share increased by 2 percentage points in the last year, and future share gains could come from investments in AI technologies. In fact, Azure OpenAI Service—a platform that enables enterprises to create generative AI applications and customize massive language models from OpenAI—is utilized by over 65% of Fortune 500 companies. Furthermore, Microsoft is the cloud services provider most expected to increase its market share over the next three years, according to a recent Morgan Stanley CIO survey.
Forecasts indicate that until 2030, the corporate software and cloud services industries will increase at annual rates of 13.7% and 14.1%, respectively. Wall Street anticipates Microsoft to expand in the interim.
17% of the Bill and Melinda Gates Foundation Trust is owned by Berkshire Hathaway.
For the first quarter, Berkshire Hathaway posted impressive financial results. GAAP earnings decreased 64% to $5.88 per diluted share (for Class B shares) while revenue increased 5% to $89.8 billion. But the drop was brought on by large investment gains the year before. Excluding those gains, operating earnings increased 39% in the first quarter, surpassing even Wall Street analysts’ highest estimate.
There are three reasons why Berkshire is a bull going forward. First off, it is among the biggest property and liability insurers globally, which means that it regularly raises a sizable amount of money in the form of premiums that may be used to purchase bonds and equities. Second, CEO Warren Buffett has proven he can generate superior returns on money. As an illustration, Berkshire’s
Third, Berkshire controls several dozen companies in the manufacturing, utilities, freight rail, and energy sectors. The business’s resilience during economic downturns can be attributed to its diversification. According to Bespoke Investment Group, since 1980, the median difference in returns between Berkshire stock and the S&P 500 has been 4.4 percentage points during recessions and 14.9 percentage points during bear markets.
For the upcoming three years, Berkshire is expected to expand operating earnings per share at a rate of 12% annually, according to CFRA analyst Catherine Seifert. Over the next five years, Argus’ Stephen Biggar projects the same rate of growth for the company. By comparison, the present price of 21.7 times operating earnings appears fair in comparison to those projections.
In fact, Berkshire’s performance can surpass that of the S&P 500,” according to Warren Buffett.