Warren Buffett and Bill Gates Now Have $1.9 Billion in Republic Services (NYSE: RSG)

By Paul Tracy,

Shutterstock photo

Bill Gates and Warren Buffett are more than just close friends and bridge buddies.  With a combined net worth of over $77 billion, they're arguably the two most powerful men in business.

So powerful, in fact, that they can move the stock market further and faster than just about any individuals on the planet.

Case in point: Last year, shares of  Dalian Dayan Trands (SHA: 600233) -- a small Chinese clothing stock -- skyrocketed +108.3% in a single month after the press discovered that both Gates and Buffett regularly wear the firm's suits.

If these two men can move the stock market by altering their dress code, just imagine what they can do when they team up and start pouring billions of dollars into one individual stock. And that's exactly what's happening...

Gates already owned 29 million shares of Republic Services ( RSG ) going into 2008. Then, he bought the stock an additional 23 different times in 2008... and bought it another 39 times in 2009. He now owns 55 million shares.

And Warren Buffett is just starting to load up on the same stock.  Berkshire-Hathaway (NYSE: BRK-A)  first bought 3.6 million shares of Republic Services between June 30, 2009 and September 30, 2009... then bought another 4.7 million shares between September 30, 2009 and December 31, 2009... and then bought ANOTHER 2.5 million shares between January 1, 2010 and March 31, 2010. Berkshire now owns 10.8 million shares.

All told, at today's prices, Buffett and Gates now have just over $1.9 billion in this stock.

What's interesting is that Gates also owns $540 million worth of this Republic Service's closest competitor, Waste Management Inc. ( WM ).

So what makes these companies so attractive?

   They control an essential service every American uses every day.

   Competition is virtually nonexistent -- these two stocks together control half of the U.S. market, giving them a virtual monopoly on this essential service.

   These growing monopolies deliver big profits for investors.  Period.  Republic Services has consistently outperformed the S&P 500 and has jumped about +40% over the past year. 

Bottom line -- Buffett and Gates could be trying to corner the market in this vital industry.  If you want to profit alongside them, then you may want to act soon. If history is any guide, then Buffett might eventually buy one (or both) of these companies outright.  The last time he did that, the shares of his target firm -- Burlington Northern ( BNI )  -- jumped +29% on the day of the announcement.

Investors who were smart enough to buy the stock a few months earlier, when word first surfaced that Buffett bought $271 million of the stock, were treated to gains of +60.6% in less than a year.

History could be repeating itself here, and you may be able to profit right alongside both Buffett and Gates as they pile into this booming stock.

Paul Tracy

Disclosure: Paul Tracy does not own shares of any security mentioned in this article.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing Stocks
Referenced Stocks: BNI , BRK-A , RSG , WM

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