Gates Foundation's Portfolio Shift: How $37 Billion in Assets Reflects a Value-First Strategy Heading Into 2026

The Philosophy Behind the Numbers: Why Tech Is Taking a Backseat

Bill Gates built his fortune on Microsoft, the technology giant that defined an era. Yet today, as he manages the Gates Foundation’s substantial $37 billion portfolio, his investment approach tells a different story. Despite his legendary status in the tech world, approximately 60% of the foundation’s assets are now concentrated in three decidedly non-technology enterprises—a strategic choice that reveals something profound about disciplined capital allocation.

The shift reflects the influence of Warren Buffett, whose annual donations to the foundation come with an implicit investment philosophy. Rather than chasing innovation, the Gates Foundation trust has systematically sold off roughly two-thirds of its Microsoft holdings, redirecting capital into slow-growing but fortress-like businesses. These aren’t flashy companies; they’re boring, predictable, and deliberately boring.

Understanding the Investment Logic: Where Warren Buffett’s Shadow Looms Large

The Gates Foundation’s trust managers clearly subscribe to Buffett’s timeless principle: seek businesses with durable competitive advantages, or what investors call “moats.” Companies that can consistently raise prices, weather economic downturns, and generate reliable cash flow take precedence over high-growth stories. This approach explains why three specific companies now anchor the portfolio.

The foundation’s managers have constructed a portfolio designed for the long haul—businesses that can survive recessions, adapt to regulation, and compound wealth through sheer operational excellence rather than market speculation. For a foundation committed to distributing 99% of its wealth over the next 20 years, this stability matters.

Berkshire Hathaway: The Foundation’s Largest Anchor at 29.3%

Berkshire Hathaway represents the single largest holding in the Gates Foundation’s portfolio. Buffett’s annual tradition of donating Class B shares—9.4 million shares gifted at the end of June this year—ensures a consistent flow of capital into the conglomerate.

The company demonstrated resilience in 2025 despite early-year setbacks from California wildfires. Third-quarter underwriting earnings surged to $3.2 billion, a dramatic improvement from $1 billion in the same quarter last year. The insurance division’s recovery offset earlier headwinds, while Berkshire’s investment portfolio continues generating returns.

A challenge remains: Buffett’s team has struggled to deploy Berkshire’s swelling cash reserves. As the company sells more securities than it acquires, cash accumulates faster than compelling opportunities materialize. At 1.55 times book value, Berkshire shares now trade closer to fair value—a notable shift from early 2025 when valuations peaked. Buffett’s retirement announcement added downward pressure, yet analysts view current pricing as reasonable given the asset base and insurance economics underpinning the business.

Waste Management: A Recession-Resistant Fortress Worth $17.1% of Holdings

Waste Management exemplifies the type of business the foundation prefers to hold indefinitely. The company operates a moat few competitors can replicate: it owns 262 active landfills across North America, and regulatory hurdles make establishing new ones nearly prohibitive.

This landfill dominance grants Waste Management pricing power competitors cannot match. The company raises rates annually, and third-party waste haulers pay premiums for access to its facilities. Meanwhile, its sprawling collection network benefits from economies of scale, driving an impressive 32% adjusted operating margin last quarter—a figure that suggests additional upside as the company continues optimizing routes and leveraging its competitive position.

Acquisition of Stericycle, now rebranded as WM Health Solutions, adds a growth vector. While currently representing less than 10% of revenue, the medical waste disposal business stands to expand significantly as America’s aging population requires more healthcare infrastructure. Management identifies cost-reduction opportunities through synergies, setting the stage for margin expansion.

At roughly 15 times forward EBITDA, Waste Management appears reasonably valued. The company’s 25-year track record of share appreciation, combined with steady pricing gains and emerging Health Solutions growth, positions it for continued gains. The foundation’s minimal share sales tell the story: management recognizes this holding as a generational keeper.

Canadian National Railway: A 13.6% Position in a Structurally Advantaged Network

Canadian National Railway connects eastern and western Canada with the American Midwest and Gulf Coast—a geographic positioning that makes it essential infrastructure. Despite being a slow-growth industry, railroads benefit from unassailable scale advantages and fragmentation that prevents new entrants.

Establishing competing scale requires thousands of freight contracts and massive capital investment, making railways among the most defensible businesses on Earth. Canadian National has leveraged this protection to steadily raise prices while expanding volumes, pushing its operating margin to 38.6% last quarter.

Tariff uncertainties created near-term volatility, with some commodity shipments declining (metals, minerals, forest products). However, management benefited from increased volumes in petroleum, chemicals, grain, coal, and fertilizers—suggesting underlying demand resilience. More impressively, the company simultaneously grew operating results, reduced capital expenditures, and expanded free cash flow by 14% through the first nine months of the year.

Management projects further free cash flow improvements in 2026 as capital intensity continues declining. This excess capital flows back to shareholders via dividends and repurchases supporting mid-single-digit earnings-per-share growth. Trading at roughly 12 times forward EBITDA versus a peer multiple around 14 times, Canadian National offers compelling value for an asset with genuine pricing power and long-term secular tailwinds.

The Bigger Picture: What This Portfolio Reveals

The Gates Foundation’s allocation demonstrates that even someone who amassed wealth through technology can recognize the merits of traditional, fortress-like businesses. When Buffett’s influence shapes investment decisions alongside professional managers, the result is a portfolio obsessed with moats, pricing power, and cash generation.

For investors studying how sophisticated capital allocators deploy billions, this portfolio offers lessons: sometimes the best investments are the boring ones, the businesses everyone overlooked, priced at fair value with predictable growth ahead.