Beyond Tech: How the Gates Foundation's $37 Billion Portfolio Reveals a Different Investment Philosophy

The Shift Away from Computing

When Bill Gates built Microsoft into a tech powerhouse, few imagined his foundation would eventually move in the opposite direction. Today, as Gates plans to donate 99% of his wealth over the next two decades, his foundation’s investment choices tell an intriguing story. Despite his legacy in technology, approximately 60% of the foundation’s trust portfolio now sits in decidedly non-tech companies—a strategic pivot that reflects decades of market experience and disciplined capital allocation.

The transformation began as the foundation systematically reduced its Microsoft holdings. Last quarter alone, investment managers divested roughly two-thirds of the trust’s Microsoft shares, signaling a deliberate reorientation. The proceeds flowed into three cornerstone positions that share common characteristics: resilient business models, sustainable competitive advantages, and predictable cash generation. This approach mirrors the investment philosophy championed by Warren Buffett, whose annual donations to the foundation have profoundly shaped its portfolio architecture.

The Buffett Connection and Value Investing Blueprint

Warren Buffett’s influence on the Gates Foundation extends far beyond charitable giving. Each year, he contributes millions of Class B shares—this year delivering over 9.4 million shares—while simultaneously guiding the foundation’s investment philosophy toward value-oriented, economically-moated businesses. Berkshire Hathaway now represents 29.3% of the foundation’s portfolio, making it the largest single holding by a significant margin.

The insurance and investment conglomerate has demonstrated consistent strength throughout 2025. Its insurance underwriting business generated $3.2 billion in earnings during the third quarter alone, a threefold jump from the $1 billion posted in the same period last year. While California’s winter wildfires initially pressured results, the operational recovery proved decisive. Simultaneously, Berkshire’s sprawling investment portfolio continues accumulating returns, though Buffett and his team acknowledge challenges in deploying the company’s expanding cash reserves at attractive valuations.

Currently trading at 1.55 times book value, Berkshire appears reasonably priced relative to early-2025 levels. Recent announcements regarding Buffett’s eventual succession have taken some speculative premium out of the stock, positioning it closer to fair value. The current valuation reflects genuine underlying asset quality and insurance earnings potential—a foundation for sustained shareholder returns.

Waste Management: The Unglamorous Cash Engine

Far from the headlines, Waste Management represents 17.1% of the Gates Foundation’s holdings and exemplifies precisely why unglamorous businesses often deliver exceptional returns. The company operates one of the most defensible business models in American capitalism. Its waste-hauling operations benefit from unmatched scale advantages, while its ownership of 262 active landfills creates an insurmountable barrier to competitive entry.

Regulatory hurdles make establishing new landfill capacity extraordinarily expensive and time-consuming. This scarcity has proven invaluable, allowing Waste Management to implement annual price increases while charging competitors fees to access its infrastructure. During the most recent quarter, the company achieved a 32% adjusted operating margin—a testament to pricing power and operational efficiency.

Recent expansion into medical waste disposal through the Stericycle acquisition (now operating as WM Health Solutions) opens an entirely new revenue stream. Though currently representing less than 10% of total revenue, management projects rapid growth from this segment over the coming decade, driven by America’s aging population demographics. Cost synergies from consolidating the two operations remain largely untapped.

The stock trades at approximately 15 times forward EBITDA, offering reasonable value even as the core waste business grows steadily. Given management’s demonstrated ability to extract margin expansion while deploying Health Solutions strategically, continued appreciation appears well-supported by underlying business fundamentals.

Canadian National Railway: Slow Growth, Fortress Economics

The third major position—13.6% of portfolio value—reflects a contrarian insight about infrastructure and pricing power. Canadian National Railway connects the Canadian interior with American Midwest and Gulf Coast destinations, operating within a transportation network where economic barriers prove formidable.

Railway economics favor incumbents. The massive fixed-cost structure of rail networks means only companies operating at substantial scale can achieve profitability. This consolidation dynamic has created an oligopoly where pricing discussions happen between just a handful of providers. Canadian National has systematically exploited this advantage, raising prices while growing volume simultaneously. Last quarter’s 38.6% operating margin illustrates the exceptional cash generation potential.

Tariff concerns dominated forecasts through 2025, yet Canadian National’s diversified commodity mix proved resilient. While metals and forest products volumes declined due to trade headwinds, offsetting increases emerged across petroleum, chemicals, grain, coal, and fertilizers. Management executed disciplined capital expenditure reductions while maintaining service quality—a combination that drove 14% free cash flow growth through the first nine months.

Looking ahead to 2026, further capital expenditure optimization should sustain cash flow acceleration. These returns flow directly to shareholders through dividends and repurchases, supporting mid-single-digit earnings growth despite modest revenue expansion. Trading at roughly 12 times EBITDA versus peers at 14 times multiples, Canadian National offers superior value for the quality of its competitive positioning.

The Quiet Philosophy Behind the Numbers

These three holdings—representing nearly 60% of the foundation’s capital—share a revealing commonality: each operates businesses where competitive advantages compound over decades rather than disrupting overnight. None would qualify as exciting venture capital opportunities, yet each delivers the stable, scalable returns that sustainable wealth preservation demands.

This portfolio construction reflects an investment framework grounded in durability over disruption, cash flow over growth narrative, and competitive moat over market momentum. For investors seeking to understand how patient capital optimizes across market cycles, the Gates Foundation’s transformation from tech-centric to economically-dominant-business-centric holdings offers instructive lessons in long-term value creation.