Bill Gates' $38B Foundation Portfolio: How 3 Stocks Dominate the Holdings Strategy

The Buffett Effect on Gates Foundation’s Investment Approach

Bill Gates isn’t just known for founding Microsoft — his philanthropic work through the Gates Foundation has shaped how billions in charitable assets are deployed. According to the latest SEC filings, the foundation’s investment trust manages approximately $38 billion in publicly traded securities. What’s striking isn’t just the size, but the composition: three particular holdings account for 59% of the entire portfolio, reflecting a clear investment philosophy inherited from Warren Buffett’s influence.

The foundation operates under a unique mandate: Gates committed to distributing virtually his entire wealth within 20 years. Yet this isn’t triggering reckless portfolio moves. Instead, the trust managers have built a portfolio anchored in predictable, moat-protected businesses — a playbook straight from the Buffett school of value investing.

Berkshire Hathaway Dominates at 29.1%

The largest holding tells the whole story. Berkshire Hathaway represents nearly 30% of the foundation’s stock portfolio, roughly $10.9 billion in value, primarily through decades of donations from Buffett himself.

What makes this position so prominent? The foundation holds approximately 21.8 million shares of Berkshire, accumulated through Buffett’s annual contributions that come with a unique condition: the organization must deploy the full donation amount plus 5% of other assets annually. Rather than immediately liquidating these shares, foundation managers chose to compound the position over time.

The transition from Buffett to new leadership under Greg Abel in early 2025 was a watershed moment. Abel now commands a $670 billion portfolio across equities, Treasury instruments, and dozens of subsidiaries. While his investment credentials aren’t as storied as his predecessor’s, Abel has proven operational mettle. The conglomerate’s insurance engine continues running strong despite Q1 2025 wildfire losses, and the balance sheet remains fortress-like.

For investors watching the position, the timing may be opportune. Since Buffett’s May retirement announcement, Berkshire’s stock price has largely stalled, pushing the price-to-book ratio down to around 1.5 — historically an attractive entry point. The underlying business continues generating robust cash flows every quarter.

WM: The Unglamorous Cash Machine (16.7%)

Few would expect a billionaire tech pioneer’s foundation to own trash collection company WM as its second-largest position. Yet this 16.7% allocation perfectly encapsulates Buffett’s philosophy: boring businesses with durable competitive advantages.

WM’s moat is almost impenetrable. The company operates over 260 landfills across North America, and the regulatory complexity of building new ones creates an invisible fortress around the business. Smaller waste haulers have no choice but to contract with WM for disposal access, giving management extraordinary pricing power.

The financial results reflect this leverage. WM’s core solid waste operations generate steady revenue growth while operating margins expand — a function of raising rates on residential customers, commercial accounts, and third-party haulers simultaneously. Even when renewable energy prices or recyclable commodity values dipped in Q3, the company shrugged it off.

Strategic acquisitions amplify the story. WM’s recent acquisition of Stericycle and rebranding as WM Healthcare Solutions opens a new revenue stream. While medical waste margins start lower, management expects to compress them toward core business levels as scale and synergies develop.

Valuation? The enterprise value-to-EBITDA ratio sits below 14x — reasonable for an industry-dominant player positioned to grow through price increases, operational leverage, and bolt-on acquisitions.

Canadian National Railway: The Long Haul Play (13.6%)

The third pillar, Canadian National Railway at 13.6% of holdings, again showcases the Buffett playbook: slow-growth industries with fortress-like competitive positions.

CNR’s geographic footprint is unmatched. Tracks running coast-to-coast across Canada and extending south through the U.S. to New Orleans create a network few competitors can replicate. The capital requirements to build competing infrastructure are prohibitive, especially without pre-existing freight contracts.

Recent months tested this advantage. Trump administration tariffs pressured traditional metal, mineral, and forest product volumes. But management offset the decline by shifting mix toward petroleum, chemicals, grain, coal, and fertilizers — a flexibility inherent in the network’s diversity. Volume growth remains glacial at just 1% annually across 2020-2024, but freight rate increases compensated.

The railroad industry’s consolidation history proves the moat’s strength. Scale advantages are enormous, and capital expenditure constraints are manageable. The result: strong free-cash-flow generation. CNR’s free cash flow grew 14% in the first nine months of 2025, with management guiding to further improvements in 2026 as capex declines.

Trading at an enterprise value-to-EBITDA ratio under 12x, CNR looks undervalued relative to peers. The structural ability to generate steady free cash flow and repurchase shares creates long-term shareholder value through compounding.

What the Portfolio Mix Reveals

The concentration in these three stocks — Berkshire Hathaway, WM, and Canadian National — alongside Microsoft holdings, tells investors something fundamental about Bill Gates and his foundation’s strategy. This isn’t a portfolio chasing growth or disruption. It’s a compounding machine built on predictable, pricing-power-laden businesses that generate durable returns.

Each of the three dominant positions shares common DNA: wide competitive moats, stable cash flows, and management discipline on capital allocation. It’s a playbook designed to weather economic cycles while gradually building wealth through reinvestment and strategic acquisitions.

For those watching how a $38 billion portfolio is constructed, the lesson is clear: Gates Foundation trustees aren’t betting on home runs. They’re compounding through the marathon.