How Gates Foundation's $37 Billion Portfolio Shifted Away From Tech: A Deep Dive Into Three Core Holdings

The Strategic Pivot: Why One of the World’s Largest Foundations Chose Value Over Innovation

When most people think of Bill Gates, they picture the Microsoft founder and tech visionary. Yet the investment strategy of the Gates Foundation tells a different story altogether. After spending decades building Microsoft into a global powerhouse, Gates is now steering his foundation’s massive $37 billion portfolio toward something unexpected: slow-growing, resilient businesses with fortress-like competitive advantages.

The shift is dramatic. As of recently, approximately 60% of the foundation’s trust holdings are concentrated in just three companies—none of which are technology firms. This represents a fundamental change in philosophy, particularly following the trust’s decision to liquidate roughly two-thirds of its Microsoft shareholdings last quarter. The influence of Warren Buffett, a longtime major contributor to the foundation through annual stock donations, is evident throughout this value-focused approach.

The reasoning behind this reallocation reveals an important truth about long-term wealth preservation: sometimes the most stable returns come not from disruption, but from businesses that solve fundamental, recurring problems.

Building Moats in Unglamorous Places: The Three Pillars of the Foundation’s Holdings

The Conglomerate Anchor: Berkshire Hathaway (29.3% of Portfolio)

Warren Buffett’s holding company represents nearly a third of the foundation’s equity exposure. This concentration wasn’t accidental—it reflects a deliberate bet on a business model that has consistently delivered resilience.

Berkshire’s insurance operations demonstrated this strength throughout 2025. While California wildfires created headwinds in early 2025, third-quarter underwriting earnings surged to $3.2 billion, more than quadrupling the $1 billion recorded in the same period the prior year. This bounce-back highlights the competitive advantage that comes with Berkshire’s scale and diversified revenue streams.

The company’s mountain of cash continues to grow as management remains disciplined about capital deployment. Rather than forcing capital into mediocre opportunities, Berkshire sells more equities than it acquires each quarter, building dry powder for eventual deployment. At current valuations—trading around 1.55 times book value—the company appears reasonably priced relative to its historical multiples and the quality of assets on its balance sheet. Recent market weakness following Buffett’s retirement announcement has actually presented a more attractive entry point for long-term holders.

The Recession-Proof Business: Waste Management (17.1% of Portfolio)

Few businesses are as unglamorous yet as effective at generating consistent returns as waste management. Waste Management’s dominance in the sector stems from an almost insurmountable barrier to entry: its unmatched landfill network of 262 active facilities.

This advantage translates directly into pricing power. As regulations make new landfill approvals extraordinarily difficult and expensive, existing operators can raise prices year after year. Waste Management charges customers for hauling while simultaneously collecting fees from competitors requiring access to its disposal infrastructure. The core waste-hauling operation delivered a 32% adjusted operating margin in the most recent quarter, and there remains considerable room for margin expansion.

The recent acquisition of Stericycle—rebranded as WM Health Solutions—opens an additional growth avenue. With an aging U.S. population driving demand for medical waste disposal, management projects this segment could expand significantly over the coming decade. Though currently representing less than 10% of revenue, this business line could become a meaningful earnings contributor.

Even at an enterprise value of roughly 15 times forward EBITDA, Waste Management appears reasonably valued. The combination of pricing discipline in the core business and emerging upside in Health Solutions suggests the market has yet to fully appreciate the total earnings power ahead.

The Logistics Backbone: Canadian National Railway (13.6% of Portfolio)

Railways represent perhaps the most economically efficient method for moving bulk freight across continents. A single train can haul what would require hundreds of trucks, delivering superior fuel efficiency and lower per-unit transportation costs.

Canadian National Railway connects major economic corridors—linking Canada’s coasts with American agricultural and industrial regions. Despite operating in a slowly-growing industry, the company enjoys protection from competition that comes with massive scale. Building a competitive railroad would require establishing thousands of freight relationships simultaneously, making new entrants essentially impossible.

Management has capitalized on this competitive fortress by steadily raising prices while growing contract volume. Operating margins expanded to 38.6% last quarter despite concerns that U.S. tariffs might damage cross-border traffic. While certain commodity categories experienced volume declines, offsetting strength in petroleum, chemicals, grain, coal, and fertilizers prevented meaningful revenue compression.

What’s most impressive is management’s ability to grow profitability while actually reducing capital expenditures. This dynamic—doing more with less—has translated into 14% free cash flow growth through the first nine months of 2025, with additional improvements expected in 2026. These excess returns flow back to shareholders via dividends and buybacks, supporting mid-single-digit earnings-per-share growth.

At roughly 12 times EBITDA, Canadian National trades at a meaningful discount to peers valued at 14 times multiples, despite demonstrating superior competitive positioning.

The Broader Lesson: Bill Gates’ Reading List and Investment Philosophy

The foundation’s portfolio construction reflects a timeless investment principle that figures like Gates and Buffett have long championed—one that appears prominently in books and interviews discussing their approach to wealth management. The shift from Microsoft’s cutting-edge innovation toward businesses solving ancient problems suggests a maturation in thinking: the most durable returns often emerge from solving recurring human needs with unbeatable efficiency.

These three holdings share common characteristics: wide competitive moats, pricing power, and predictable cash generation. None will headline the financial media with revolutionary breakthroughs. Yet all three will likely remain relevant decades from now, generating steady returns for patient capital.

As Gates distributes 99% of his remaining wealth over the next 20 years, the foundation’s investment choices signal confidence that these businesses will provide steady, reliable support for philanthropic activities—a fitting foundation for global impact.