Bill Gates’ Hedge Fund Recent Buys: BRK.B; MSGS; CVNA; VRM

The Bill & Melinda Gates Foundation Trust, a hedge fund controlled by Microsoft co-founder Bill Gates, his former wife Melinda Gates, and ace investor Warren Buffett, has been avoiding making a lot of additions to its portfolio this year. However, shares of four companies have been bought recently, putting them in the spotlight: Berkshire Hathaway (NYSE:BRK.B), Madison Square Garden Sports, also known as MSG Sports (NYSE:MSGS), Carvana (NYSE:CVNA), and Vroom (NASDAQ:VRM).

Before we discuss the stocks, let's first talk about what Bill Gates’ hedge fund does.

What Does the Bill and Melinda Gates Foundation Invest In?

The biggest pieces of the $17.68 billion pie are distributed among six stocks: 53.56% in Berkshire, 16.12% in Waste Management (NYSE:WM), 7.38% in Caterpillar (NYSE:CAT), 6.54% in Canadian National Railway (NYSE:CNI), 3.80% in Ecolab (NYSE:ECL), and 2.07% in Walmart (NYSE:WMT).

The fund is strategically distributed among the following sectors: financial (54.91%), industrial (16.88%), services (16.63%), consumer goods (5.3%), basic materials (3.8%), and technology (2.41%).

Given that the foundation has gained almost 202% in the last nine years, the fund seems to be well managed and optimally allocated.

What Has the Fund Shopped for This Year?

The fund has not been too active in making Buy transactions this year. However, on June 30, the fund increased its positions in Berkshire by almost 21% and in MSG by almost 113%. Moreover, two new stocks were added to the portfolio: $11.74 million worth of shares of Carvana and $3.13 million worth of Vroom.

Carvana and Vroom now occupy 0.07% and 0.02% of the total fund holdings, respectively.

Now, let's talk about each of these companies.

What Is Berkshire Hathaway and is It a Buy?

Berkshire is an amalgamation of several successful businesses. The holding company, owned by Warren Buffett, owns significant stakes in many businesses. Berkshire has two classes of shares, the more expensive class A shares and the class B shares, which are more attainable for retail investors. Only one analyst has covered BRK stock in the past three months, giving it a Hold rating and a $535,000 per share price target, implying 28.3% upside potential. Nonetheless, hedge funds and retail investors are both bullish on the stock.

What is MSGS Sports and is It a Buy?

Interestingly, MSG Sports owns professional sports teams like the NBA's New York Knicks, the NHL's New York Rangers, the NBAGL's Westchester Knicks, and the AHL's Hartford Wolf Pack. Apart from the popular teams, certain media rights are also among the company’s unique assets. MSG enjoys a Strong Buy rating from Wall Street analysts based on three unanimous Buys. The average MSGS stock prediction points at an average price target of $222.33, which is about 41% more than the current price.

What is Carvana? Is CVNA Stock Worth Buying?

Carvana provides an e-commerce platform for old car exchanges. Despite some fundamental weaknesses, five-star-rated Wedbush analyst Seth Basham feels that Carvana’s 2022-23 launch of a prime ABS deal underscores its focus on attracting investment for its auto loan receivables through whole loan sales. The analyst has a Buy rating and a price target of $50 on Carvana, implying 58.8% upside potential.

Will Carvana's Rival Vroom Increase in Value?

Vroom, Carvana’s rival company with a similar business model, runs the risk of a trade-down effect if the economy hits a recession, but that hasn't pushed the consensus to a Sell. Rather, the Wall Street consensus is a Hold rating based on one Buy, two Holds, and one Sell. Moreover, the average VRM stock price target of $2.50 implies 58.2% upside potential, as calculated from the price targets given by four analysts in the past three months.

Where and How You Can Find This Information

In uncertain market conditions, it makes sense to keep track of what experts are saying or doing. To that end, there is the TipRanks Expert Center, which holds several key tools that can help investors get a better insight into the opinions, transactions, history, returns, and track record of market experts.

Within this, the Hedge Fund Trading Activity tool shows us how the top hedge funds are allocating their money. Transaction patterns of hedge funds can help us frame a better understanding of where a particular stock might be heading.

Just three simple steps are required to arrive where we did:

Step 1: This, of course, involves arriving at the home page of TipRanks.

Step 2: Click on the Ideas tab, and then choose ‘Expert Center,’ as demonstrated.

Step 3: Pick ‘Hedge Fund Managers,’ and there you are, with a comprehensive view of the top performing funds and their transaction details.

Conclusion: Hedge Fund Buying Should Be Closely Watched

The goal of hedge funds is to hedge investors’ money from value erosion from market downcycles. Thus, when a large hedge fund, such as the Bill & Melinda Gates Trust, makes a Buy transaction, it is usually when they see a solid upside to the stock. Following hedge fund activities can be a great practice in the journey of making informed investments, especially in rocky times.


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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