Bill Gates Keeps Getting Richer. Here's the World's Richest Man's Secret

Bill Gates is known for his fortune from Microsoft, but the money he made in 2013 came from a number of unlikely sources.

Jan 11, 2014 at 12:40PM

Bill Gates is the world's wealthiest man -- but there is one simple trick everyone can learn from his investing style.

It has been reported that in 2013, Bill Gates added an astounding $15.8 billion to his wealth, bringing his estimated net worth to nearly $80 billion, yet the way he did it may surprise you.

Beyond Microsoft
It's no secret Bill Gates has an enormous amount of wealth tied up in Microsoft (NASDAQ:MSFT) -- but he actually also has an immense amount of money in publicly traded companies that the average person can buy. In fact, according to Bloomberg, Microsoft stock accounts for only a little less than 17% of Gates' massive fortune.

Robert Scoble
Source: Robert Scoble on Flickr.

Of Gates' wealth -- most of which is held in Cascade Investment, his own investment firm -- about half of it is tied to the shares of publically traded companies, and the rest is invested privately.

In fact, his largest public holding outside of Microsoft isn't even an American company, but instead Montreal-based Canadian National Railway (NYSE:CNI), which Gates has a $4.8 billion position in. The next behind Canadian National Railway is Republic Services (NYSE:RSG), which is one of the largest waste disposal companies in the world, and in which Gates has a $2.9 billion position.

Auckland Photo News

Source: Flickr/Auckland Photo News

Gates also has $2.9 billion worth of Ecolab (NYSE:ECL), which is a global provider and manufacturer of sanitary products for a variety of industries and groups. Close behind that is another industrial agricultural manufacturer, Deere & Company (NYSE:DE), of which Gates, through Cascades Investments, owns a little over 8% of the company, or $2.7 billion. 

What we can learn
At first glance, there's little rhyme or reason to what Gates holds. They all pay dividends, but outside of Republic Services and its 3.2% dividend yield, none of the previously mentioned companies do so at a rate that would make an income investor raise his eyebrows.

Deere & Company is certainly an interesting consideration from a value investor's perspective, as it only trades at a trailing 12 month price-to-earnings ratio of around 10. However, the rest of the companies trade anywhere between 19 and 35 times their price-to-earnings ratios. Certainly value investors wouldn't be drawn to these.

Seemingly, it isn't even as though a definitive conclusion can be drawn from what Gates or Michael Larson, the manager of Cascade Investment, does with the immense amount of wealth that Gates has accumulated.


Source: Issac Mao on Flickr.

Yet when Gates first tabbed Larson to be his fund manager, he said, "I wanted someone with a conservative philosophy about investing. I needed to have complete faith in the person I picked, since I didn't ever want to have to look over their shoulder."

Larson himself noted plainly in a Fortune article, "I'm not a risk taker." He went on to say, "my most important job is asset allocation. That's where the real money is made."

The beauty of diversification
Perhaps, the lack of continuity and overlap is Gates' method. His wealth is diversified enough to protect it and grow it when opportunity, no matter what it looks like, arises in the eyes of his trusted fund manager. It is critically important to remember that having a diverse portfolio is essential as you invest for the long term, and the example of the world's wealthiest man provides only further evidence of that.

Leaked: Apple is still out-innovating Microsoft!
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Fool contributor Patrick Morris has no position in any stocks mentioned. The Motley Fool recommends Canadian National Railway and Republic Services. The Motley Fool owns shares of Ecolab and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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