Bill Gates invests $650 million in “under-the-radar company” — who is it?

Where does the Motley Fool Canada say that Bill Gates is picking up shares and sees "potentially enormous opportunity?"

By Travis Johnson, Stock Gumshoe, June 10, 2019

We’ve got a lot of choices when it comes to teaser pitches this week, including some ratcheted-up reruns from Dr. Kent Moors reiterating his older Permian Basin and Solar Energy pitches, some CBD stocks, and a few others that are generating attention… but the one that caught my eye was from a smaller publisher, Motley Fool Canada, so I thought we’d start with that one… mostly because, well, seeing Bill Gates make big bets on the future of technology sounds interesting, right?

The headlines I received questions about were things like “World’s 2nd richest man bets $650m on 1 stock” and “Microsoft founder just bet $650 million on this little-known company” … and though Bill Gates is certainly far more well-known for his business success than his investing chops, and doesn’t probably do much when it comes to the actual stock-picking in his portfolio, it’s still a tempting tease.

In case you’re curious for a little back story, Bill Gates’ money, which is actually mostly in the Bill and Melinda Gates Foundation, is managed by Michael Larson and his Cascade Investments, so you’ll generally see the foundation or Cascade as the “owner” who pops up in the SEC filings when you’re looking for stocks connected to the Microsoft founder and longtime holder of “world’s richest man” title. Thanks to Buffett’s major gift to the foundation, roughly half of the foundation investments are in Berkshire Hathaway shares and much of the rest is in a few very large “blue chip” type companies — Waste Management, Canadian National Railway, Wal-Mart, and, yes, Microsoft.

But what, pray tell, is this $650 million stake they’ve taken?

Here are the clues we get in the email ad from Jared George, which is peddling subscriptions to their Stock Advisor Canada newsletter ($149/yr, modeled after the US flagship Stock Advisor newsletter from the Motley Fool, though in this case alternating US and Canada-listed picks):

“Bill Gates has quietly picked up 5.3 million shares of one under-the-radar company with the keys to a startling new technology.

“His total investment adds up to more than $650 million in cold hard cash…

“And it means investors like you and I should be paying very close attention.”

OK, I know nobody wants to do math on a Monday morning… but still, if Gates investment adds up to more than $650 million and he controls 5.3 million shares, you can use plain old division to get the rough share price of the company being teased.

No, leave the calculator in your drawer, we’ll do it for you — the rough hint for the share price, then, is “more than $122 per share.”

And we get the typical embellishment:

“… besides being the co-founder of Microsoft, Gates is also one of the richest men in the world with a $100 BILLION net worth…

“And when he puts this much money behind something, you can bet he sees immeasurable profits ahead.”

I don’t know about that. Yes, I’m sure he thinks it’s a fine investment… but his mind is on the Foundation and improving the world these days, I don’t imagine he’s spending a lot of time forecasting whether Michael Larson’s stock picks are going to beat the market or not and I doubt he’s spending a lot of time swinging wildly for “immeasurable profits.”

But I digress… do we get any other clues?

“Gates isn’t alone in seeing a potentially enormous opportunity here…
• SoftBank is investing $1.8 billion into this technology
• Trump just announced the government’s plan to invest $20 billion into it
• Apple CEO Tim Cook says this technology ‘is on everybody’s roadmap'”

OK, so those aren’t hints about a specific company — they’re general clues about 5G, which, yes, everyone and his brother is investing gajillions of dollars into the upgrade to this next leap forward in mobile networks (and, of course, 5G leadership is the elephant in the room when President Trump and Premier Xi are arguing about trade and Huawei).

Other hints about this stock?

“… we believe one stock poised to profit the most from this ground-breaking technology is NOT Microsoft, Apple, or any of the companies you’d expect…

“But is actually the exact same company Bill Gates himself is personally investing a fortune into.

“Because this little-known company already owns an arsenal of assets that will be absolutely essential to bring this technology to the market.”

And we get one other tidbit:

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“… its stock has already earned investors 1,134% returns over the past decade alone”

So this is a stock that has done well, and is probably a pretty big company — big enough for the Gates Foundation to have a largish position. Where do those clues send us?

Well, since it’s a sunny day they send me straight out to the Thinkolator, though it took just a few seconds to shovel in those clues and get our answer out the other end… this one is Crown Castle (CCI), one of the cell tower REIT companies.

And, yes, it’s a stock I also own — though there’s a lot less of it in the Real Money Portfolio than there is in the Bill and Melinda Gates Foundation portfolio (even on a relative basis — Gates has about 3% of the foundation’s 13F-reported investments in Crown Castle, yours truly is right around 1%, mostly because I’ve been a little too chary with the surge in valuation this year… though that’s not the same as saying he “invested $650 million,” more on that in a minute).

But yes, the reason to invest in Crown Castle is because their telecom infrastructure should be critical for the continuing growth in wireless networks in the US… and, particularly, for 5G as they build out both small cell locations (5G is much shorter-range than 4G, so requires many more antennas, much closer together, which is one of CCI’s real focus areas) and provide a strong foundation for those small cells by tying them in to fiber networks for backhaul.

There are a few tower operators of meaningful size, and they’re all pretty expensive and have all converted to become Real Estate Investment Trusts for the tax benefits — American Tower (AMT) is the leader both in size and international scope but pays a paltry dividend, SBA Communications (SBAC) also has substantial international holdings but was a turnaround until recently and, though it has converted to REIT status, had suc