Is Bill Gates Crazy?

Want to look like a billionaire? Buy worthless junk by the truckload.

That's what Microsoft (Nasdaq: MSFT  ) co-founder Bill Gates just did. His investment company, Cascade, bought 3 million shares of Crocs during the fourth quarter.

A 6-million-share sucker punch
Interestingly, this isn't Gates' first purchase of Crocs shares. He and wife Melinda's charitable trust scooped up -- zoom camera, finger upturned -- one-meeelliioon shares last spring. The trust has purchased 2 million more shares since.

I don't understand this. Crocs' business just keeps getting worse. Profits are down. Inventory is way up. But Gates keeps buying. Here's what Motley Fool CAPS has to say:

Metric

Crocs

CAPS stars (out of 5)

**

Total ratings

2,278

Percent bulls

74.4%

Percent bears

25.6%

Bullish pitches

415 of 589

Data current as of Feb. 19, 2009.

"The Crocs story is done, played out, kaput, yesterday's news, and thank God. They were an inexplicable fad to begin with, and stories of kids getting their feet caught in escalators didn't help matters. Yeah, some people will still buy them; some people still buy lava lamps, too," wrote CAPS All-Star BSHumphreyII in December.

On the other hand, as bad as this Crocs pick looks, some of Gates' other holdings reveal a taste for deep value stocks, a time-tested strategy that can yield enormous wealth if done right. The highlight reel:

Company

CAPS Stars

Berkshire Hathaway (NYSE: BRK-A  )

*****

Canadian National Railway (NYSE: CNI  )

*****

Johnson & Johnson (NYSE: JNJ  )

*****

McDonald's (NYSE: MCD  )

****

Schering-Plough (NYSE: SGP  )

****

Source: Cascade & Gates Foundation filings and CAPS.

That's a strong list. And good thing: Gates may not be crazy, but his portfolio's going to need pain pills and a pack of gauze for all the bleeding that Crocs has caused.

Get fitted for further Foolishness:

Berkshire Hathaway and Canadian National Railway are Stock Advisor selections. Berkshire and Microsoft are Inside Value picks. Johnson & Johnson is an Income Investor recommendation. Try any of these Foolish newsletter services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers, like The Motley Fool, owned shares of Berkshire at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is headed upstairs for another cup of coffee. Can it get you anything?


Read/Post Comments (3) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 19, 2009, at 4:42 PM, PennyPincher12 wrote:

    That's weird that he would buy that. From what I know, Gates is a good investor. Interesting.

    Then again, everyone makes mistakes.

  • Report this Comment On February 20, 2009, at 8:36 AM, catoismymotor wrote:

    Crocs might be a semi-crazy pick. Maybe he just wants free shoes for life? But if you want a truely crazy pick that he could make I would say that Google and Red Hat would be worse. Think about the waves of confusion and anger that would roll through Microsoft HQ and the average stock holder. I think putting his money into those would cause Microsoft stock to drop 20 - 30% in just one day.

  • Report this Comment On February 20, 2009, at 9:26 AM, FrankMom wrote:

    This is interesting news. Maybe he is really wanting control of the company. His charitable organization could use crocs for all those people overseas who have no shoes. Could be quite a deal for them. It is Bill Gates buying the shares, not MS. His heart and mind are on his charity, not making more money.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 835301, ~/Articles/ArticleHandler.aspx, 10/31/2014 9:44:24 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement