Bill Gates’ 2022 Portfolio: 10 Value Stock Picks

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In this article, we discuss 10 value stock picks from Bill Gates’ 2022 portfolio. If you want to skip our discussion on the latest developments in Gates’ Foundation, go directly to Bill Gates’ 2022 Portfolio: 5 Value Stock Picks.

Founded in 2000, The Bill and Melinda Gates Foundation is the largest private charitable organization in the United States. Over the previous two decades, it has spent more than $50 billion on global healthcare, including $1.75 billion on COVID-19 assistance.

On June 14, Bill and Melinda Gates Foundation Trust received a boost after Warren Buffett announced that he would donate $3 billion to the Trust. The contribution will be made by giving 11 million Class B shares of Berkshire Hathaway Inc (NYSE:BRK-B). The foundation already held 28.7 million shares of Berkshire Hathaway Inc (NYSE:BRK-B) as of March 31. Since 2006, the Oracle of Omaha has donated $36 billion to the Bill and Melinda Gates Foundation. Bill Gates thanked his long-time friend Mr. Buffett for his donations through a tweet. Both these individuals lead the “Giving Pledge” initiative, which comprises over 200 leading personalities like Carl Icahn, Elon Musk, Mark Zuckerberg, and Michael Bloomberg. All these individuals have pledged to give half of their wealth to charity.

Bill and Melinda Gates Foundation Trust has $19.76 billion in assets under management as of Q1 2022, with a 95.92% concentration of top 10 holdings. The fund made no new purchases in the first quarter but reduced its holdings in 8 stocks and closed its position in four others. Some of the popular stocks in Gates’ portfolio include Berkshire Hathaway Inc. (NYSE:BRK-B), Caterpillar Inc. (NYSE:CAT), and Coupang, Inc. (NYSE:CPNG) as of Q1 2022.

Our Methodology

In this article, we will be discussing the 10 value stock picks from Bill Gates’ 2022 portfolio. These stocks were picked from the Q1 2022 portfolio of the Bill and Melinda Gates Foundation Trust. We have analyzed the P/E ratios for stocks to determine if the companies are trading at a discount. Business fundamentals, analyst ratings, and hedge fund data based on the 912 funds tracked by Insider Monkey at the end of Q1 2022 have also been discussed.

10. Sanderson Farms, Inc. (NASDAQ:SAFM)

Number of Hedge Fund Holders: 35

Bill Gates’ Stake Value: $98,289,000

Percentage of Bill Gates’ 13F Portfolio: 0.49%

Stock Price as of June 14: $207.41

Sanderson Farms, Inc. (NASDAQ:SAFM) is a Laurel, Mississippi-based poultry producer. The company is the biggest poultry producer in the US, with a weekly production capacity of 13.65 million chickens.

The company is in the middle of a takeover by food giants Cargill and Continental Grain for $203 per share. However, the rising chicken prices in the US have taken the price above that level. Sanderson Farms, Inc. (NASDAQ:SAFM) stock is trading at a forward P/E multiple of 6.6x as opposed to an average P/E of 9.6x for its competitors, Pilgrim’s Pride Corporation (NYSE:PPC) and Tyson Foods, Inc. (NYSE:TSN), as of June 14. The Department of Justice (DoJ) and the Department of Commerce are vetting the proposed deal. They could challenge the merger due to its impact on the overall competition in the poultry industry at a time when inflation is already impacting consumers. Sanderson Farms, Inc. (NASDAQ:SAFM) had anticipated the merger to be completed by the first half of 2022.

As of Q1 2022, 35 elite funds reported owning a stake in Sanderson Farms, Inc. (NASDAQ:SAFM).

9. United Parcel Service, Inc. (NYSE:UPS)

Number of Hedge Fund Holders: 50

Bill Gates’ Stake Value: $158,848,000

Percentage of Bill Gates’ 13F Portfolio: 0.8%

Stock Price as of June 14: $174.16

United Parcel Service, Inc. (NYSE:UPS) is an Atlanta, Georgia-based shipping and logistics company.

United Parcel Service, Inc. (NYSE:UPS) stock is trading at a forward P/E multiple of 14.22x as opposed to the sector median of 17.64x. This reflects a 19.36% discount against the sector. Meanwhile, against its own five-year forward P/E multiple of 27.63x, United Parcel Service, Inc. (NYSE:UPS) stock is trading at a 48.52% discount. The company has also been increasing its dividends for the past 22 consecutive years.

United Parcel Service, Inc. (NYSE:UPS) is expected to be a beneficiary of the e-commerce boom as e-commerce sales are expected to contribute more than 20% to the total global retail sales in 2022. An increase in e-commerce and conventional sales will add to the revenue and earnings of UPS as manufacturers and e-commerce giants would need the company’s logistical support to move stocks to brick-and-mortar stores and warehouses. United Parcel Service, Inc. (NYSE:UPS) is trading at a trailing 12-month price-to-FCF (P/FCF) multiple of 13.68x as opposed to the P/FCF multiple of 17.79x for FedEx Corporation (NYSE:FDX).

Here’s what ClearBridge Investments said about United Parcel Service, Inc. (NYSE:UPS)  in its Q4 2021 investor letter:

“Despite these mixed emerging growth results, the ClearBridge Global Growth Strategy outperformed the benchmark due to resilience among our secular and structural growth holdings. The bulk of these contributions came from U.S. mega-cap growth stocks Apple and Microsoft which continued to uniquely act both offensively and defensively as they have through most of the pandemic. These consistent growers were complemented by solid contributions from structural holdings including United Parcel Service.”

United Parcel Service, Inc. (NYSE:UPS)  was held by 50 hedge funds at the end of Q1 2022.

8. FedEx Corporation (NYSE:FDX)

Number of Hedge Fund Holders: 52

Bill Gates’ Stake Value: $123,646,000

Percentage of Bill Gates’ 13F Portfolio: 0.62%

Stock Price as of June 14: $223.62

FedEx Corporation (NYSE:FDX) is a multinational conglomerate specializing in transportation and e-commerce services.

FedEx Corporation (NYSE:FDX) is trading at a forward P/E ratio of 11.74x, which is significantly below the company’s median of 13.8x over the previous five years and nothing near the 2020 highs of 23.8x. In addition, the value reflects a 42% discount to the S&P 500’s forward earnings multiple of 18.6x.

On June 14, Christian Wetherbee at Citi reiterated a Buy rating on FedEx Corporation (NYSE:FDX) stock after the company announced a deal with DE Shaw. The deal involves the nomination of two new directors, a reform in long-term remuneration to achieve reduced CAPEX, and a 53% rise in its dividend.

Artisan Partners shared its stance on FedEx Corporation (NYSE:FDX) in its Q3 2021 investor letter. Here’s what the firm said:

“Our weakest Q3 performers included FedEx. Shares of FedEx, a global shipping and logistics firm, were held back by disappointing business results as labor cost headwinds and air network disruptions overshadowed solid top-line trends. We think the company should be able to overcome these near-term issues. Importantly, FedEx Corporation (NYSE:FDX) has strong pricing power as it operates in a consolidated global shipping industry. In September, the company announced it would increase its shipping rates by an average of 5.9% across most of its services, which is the first time in several years that its annual increase would exceed 5.0%. The industry’s renewed pricing discipline is a welcome change, reflecting a broader commitment to earn better returns on invested capital. FedEx Corporation (NYSE:FDX) is also closer to fully integrating TNT, a European-focused parcel company it acquired in 2016. The market is beginning to incorporate a higher probability FedEx Corporation (NYSE:FDX) will fully integrate TNT, which will provide a significant boost to profits. The stock now trades at a near-trough multiple of less than 12X 2022 earnings, so we added to our position on weakness.”

Of the 912 hedge funds in Insider Monkey’s database, 52 funds held a stake in FedEx Corporation (NYSE:FDX) as of Q1 2022.

7. Deere & Company (NYSE:DE)

Number of Hedge Fund Holders: 66

Bill Gates’ Stake Value: $373,771,000

Percentage of Bill Gates’ 13F Portfolio: 1.89%

Stock Price as of June 14: $326.58

Deere & Company (NYSE:DE) is a Moline, Illinois-based firm involved in the production of agricultural and forestry machinery, diesel engines, and heavy equipment.

The stock is trading at a forward P/E multiple of 14.13x as compared to a median forward P/E multiple of 15.35x for the industry as of June 14, reflecting a discount of 7.93%. When compared against its five-year average forward P/E multiple of 18.73x, Deere & Company (NYSE:DE) stock is trading at a discount of 24.57%.

On May 23, Kristen Owen at Oppenheimer gave Deere & Company (NYSE:DE) an Outperform rating with a target price of $419. The analyst sees the recent pullback in the stock price as an overreaction from the market as there was no fundamental change in the growth story. Investors became concerned after Deere & Company (NYSE:DE) missed revenue estimates by $1.2 billion as $1 billion worth of machines were partially completed due to supply chain challenges.

Deere & Company (NYSE:DE) was discussed in the Q1 2022 investor letter of ClearBridge Investments. Here’s what the firm said:

“Industrials holding Deere (NYSE:DE) was also a strong contributor to performance during the quarter. Through its unmatched 5,000 dealer network across 160 countries, Deere is a major global player in agricultural, construction and forestry equipment, with a particularly dominant position in U.S. agriculture. Deere’s moat around its core equipment capabilities, coupled with years of substantial investments in technology and innovation, further extends its competitive advantage into precision agriculture, which allows for higher farm yields with lower use of fertilizers, pesticides and water, thereby improving farmers’ bottom lines while reducing their environmental footprint. In addition to drought conditions in Latin America, the war between Russia and Ukraine, two major exporters of corn and wheat, is further disrupting the global agricultural commodities market and pushing prices even higher. This should mean higher farmer revenues and greater demand for Deere’s equipment, which is further supported by some of the lowest levels of inventory of new and used equipment on record.”

As of Q1 2022, Deere & Company (NYSE:DE) was held by 66 hedge funds.

6. Walmart Inc. (NYSE:WMT)

Number of Hedge Fund Holders: 60

Bill Gates’ Stake Value: $449,866,000

Percentage of Bill Gates’ 13F Portfolio: 2.27%

Stock Price as of June 14: $119.46

Walmart Inc. (NYSE:WMT) is a Bentonville, Arkansas-based retail giant that operates a chain of discount stores, department stores, grocery stores, and hypermarkets.

In a research note issued on June 5, Peter Benedict at Baird liked the forward EPS of 19x only for Walmart Inc. (NYSE:WMT). This is because the stock offers near-term attractiveness due to its defensiveness and a disruptive outlook in the long term. The analyst has given Walmart Inc. (NYSE:WMT) stock an Overweight rating with a price target of $155 following the annual shareholders’ meeting. There was no negative development in the meeting in the form of downward revision of any guidance, which was in itself a positive development as the big-box retailer has been fighting inflationary pressures and working on better inventory management.

Walmart Inc. (NYSE:WMT) can combat inflation due to its sales mix in the grocery business, its presence as a leading gasoline retailer, and the locations of its stores.

Walmart Inc. (NYSE:WMT) was held by 60 hedge funds as of Q1 2022.

In addition to Walmart Inc. (NYSE:WMT), Gates also has a stake in stocks such as Berkshire Hathaway Inc. (NYSE:BRK-B), Caterpillar Inc. (NYSE:CAT), and Coupang, Inc. (NYSE:CPNG) as of Q1 2022.

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Disclose. None. Bill Gates’ 2022 Portfolio: 10 Value Stock Picks is originally published on Insider Monkey.