Bill Gates on track to own no Microsoft stock in four years | Hacker News Reader

Bill Gates on track to own no Microsoft stock in four years

reuters.com

64 pointsgdilla54 comments

Whether Gates owns Microsoft stock is of little relevance to either Gates or Microsoft. He's clearly not selling because he needs the money; he's selling because eventually he (or indeed his philanthropic foundation) will have more use for cash than MSFT shares.

As the article says, he is selling the stock progressively. I know very little about stock market strategy, but presumably this is the most effective way to divest without flooding the market, shocking the market, sending signals, prompting investigations of financial impropriety, etc.

"He's clearly not selling because he needs the money; he's selling because eventually he ... have more use for cash than MSFT shares."

So, iow, he wants the money.

needs vs wants

The billion-dollar question is, of course, why is Gates selling? He personally doesn't need to sell so much stock -- he's already got enough cash at hand.

The Bill & Melinda Gates Foundation doesn't need it either -- it's endowment is currently $40.2 billion (i.e., that's how much cash & investments it has available for grants), and it's giving away "only" $3.4 billion a year, so it won't need new cash injections anytime soon.[1]

If Gates believes Microsoft's stock is a good long-term investment, he (and the foundation) would be better off if he were to hold on to the stock and sell it for a lot more in coming years.

Something doesn't add up.

Perhaps this wasn't a "sale" of stock in the ordinary sense, but some kind of transfer of stock ownership to the foundation's endowment?

[1] http://www.gatesfoundation.org/Who-We-Are/General-Informatio...

>why is Gates selling?

Diversification? I don't see the point in remaining one of the largest shareholders in a single company, especially if you're not going to take an active role.

>Perhaps this wasn't a "sale" of stock in the ordinary sense

He's been selling his stock for years, I believe.

I agree. The article explains exactly that in the second sentence:

"Gates […] has sold 20 million shares each quarter for most of the last dozen years under a pre-set trading plan."

This isn't a former CEO getting out while the getting's good, this is a guy who's been consistently diversifying his portfolio for over a decade. Either he thought MSFT was a bad long-term investment back in 2002 (which seems unlikely; Windows XP just hit the market doing gangbusters) or he thought that having the entirety of his fortune tied up in a single company is dangerous.

He still has 330 million shares in MSFT. At around $40/share, that's still $13 billion. If he sells 300 million more shares (91% of his remaining holdings), he'll still have around a billion bucks invested in Microsoft. He's a rich dude, but it's still a billion dollars!

He also has the advantage of being Bill Gates. Barring any catastrophic mistake on his part, he'll always be able to influence Microsoft, even if he isn't anywhere near their biggest shareholder.

One day, MSFT will become a bad long-term investment. Selling regurlarly is a good way to disengage without triggering any panic among shareholders. I do not like the man, but Bill Gates has always been very clever for business. BTW, I wish the best to Satya Nadella.

In 2014, how can you not like Bill Gates. He's a far better person than Steve Jobs ever was. He's making the world a better place.

I have finished my studies in 1993. I have seen all the innovation between 1982 and 1990 (Commodore, Amstrad, Oric, ZX, Turbo Pascal, ...) and how Bill Gates has killed software I was using (Stacker, dr dos, gem, ...). I think he has contributed to slow down innovation by his monopolistic tactics (windows undocumented, ...). Microsoft bad behaviour has been clearly demonstrated in trials. I think that the current wave of innovation does not owe anything to Microsoft. Now, he may be another man, I do not know, but I know what he did to computer science.

This is such a tired meme. They both made bad choices and were both, at various points in time, equally reviled. Gates has simply had the time and inclination to rehabilitate his image in public through an impressive array of charitable works - we don't need to continuously harp on Jobs just because he's dead now and will never have that chance.

A bigger endowment means the Foundation can give away more annually. $3.4B/year is a lot of money, but I'm sure they can think of more projects they'd like to do with twice that annually.

I thought the amount in the endowment wasn't supposed to be touched and that the interest/dividends on it were what was used for day-to-day operations.

Most founders have a sense of entitlement to their companies and understandably so. In fact, it becomes a generational entitlement, as can be seen with family businesses and family fortunes.

Gates displays advanced thinking in divesting his entire ownership. I imagine it must have been a difficult decision to let go so completely. This is admirable.

He hasn't sold it all yet; for all we know he might have instructions to retain one percent. Or π percent. Bill is always going to have some spiritual importance to Microsoft, whether he owns 4%, 1% or a single share certificate elegantly framed for his bathroom wall.

I think Gates has stated he won't be leaving anything for his children.

More accurately he wants to leave them "enough that they can do anything they want, but not enough to that they can do nothing".

which translates into $10M I think

If you're ever in this position, and you own a massive chunk of a highly liquid stock, I have one word for you ... diversify

Good advice. For me, it's hard to imagine the world's richest man isn't already pretty diversified.

At some point, the point of diversification doesn't hold a lot of value any more. You typically diversify to protect your assets/principal/etc. There's little that could happen on the world markets to obliterate Gates' wealth to the point where "diversification" would have had a substantially different impact on him and his family.

You do realize it says: "Assuming no change to that pattern". Can't Reuters apply that analysis to any event and extrapolate "reportable" results?

Some examples: - assuming no change to the Facebook user acquisition pattern, it will reach over 20B users in several years - assuming no change to the growth of a company, it will become larger than the market in 5 years

It's much easier to make reasonable assumptions about a pattern that is intentional and easily executable upon, such as regularly selling stock one already owns. User acquisition, on the other hand, depends on many variables out of one's control. Also, people use something called critical thinking, e.g. Facebook can't attract more customers than there are humans, something you will find useful as well.

Maybe he doesn't think Microsoft will do very well in the future, something I also believe. Both Windows and Office will become almost completely commoditized in the future, by Android and iOS. This has already started with Microsoft starting to offer free versions of Windows for some type of devices, on which they make no money. It's just a matter of time before this happens to most of their market segments (except enterprise, where I expect them to keep selling Office and Windows for quite a while).

Microsoft's revenue and net income has been growing over the past years, so while the media is happy to declare it dead, it is still in a good, health position.

Or maybe because he doesn't expect doctors fighting malaria to receive their paycheck through NASDAQ.

If he were to invest his entire net worth on SP500, he would own about 45M shares of MSFT. So, relatively, he still has a lot of MSFT.

Microsoft is doomed! Surely if anyone knows a good reason to sell of shares, it's the founder!

Or, more realistically, Gates thinks his money is more worthwhile as cash than stock. It would be much easier for him to leave his philanthropic legacy a pile of cash instead of shares in Microsoft, so he's probably just shifting that balance now.

He's not going to hold it as cash, it's going to be held as more diversified investments. He wants his foundation to far outlive himself.

No, the plan is to wind down the foundation within 20 years of his and Melinda's deaths. See http://en.wikipedia.org/wiki/Bill_%26_Melinda_Gates_Foundati...

My favorite section is actually the Criticisms. I find myself finding ways mentally to dismiss them, because of the massive good the foundation is doing.

That could still easily be 50-70 years.

I know he has an investment vehicle of some kind to manage his wealth (I think it's called Cascade?) but does anybody know what it has stakes in? And his quoted wealth figure doesn't include what he's given to his foundation, right? I just think it's pretty amazing that he's still #1 or 2 on the richest list given how little he owns of Microsoft and how much he's given away.

Cascade is in Kirkland. I've heard they have around 100 employees. In addition to managing Bill Gates' portfolio, they also manage the portfolio of the Gates Foundation. They intentionally keep a very low profile.

It most likely consists of shares in far too many things to list. The amount of his money in MSFT doesn't matter unless MSFT outperforms the rest of his investments, no?

https://en.wikipedia.org/wiki/Cascade_Investments_LLC

Here are his most recent sales. To quote Chazz Michael Michaels, the amounts are mind bottling: http://biz.yahoo.com/t/38/567.html

No comments about how Paul Allen has been doing the same thing?

Sci-fi memorabilia doesn't buy itself.

Maybe a dumb question - if he only owns 330 million shares ($13 billion net worth), how is he worth $77 billion? That's quite a bit of a difference...

He'll probably want to keep a few shares -- now that Balmer isn't the CEO company has a shot of getting back on track.

Your comment is based on absolutely nothing aside from a little Balmer bashing. It's unlikely that he's selling because he thinks MSFT will under-perform, he's selling because he doesn't want the stock anymore therefore Balmer being replaced as CEO is unlikely to be an influencing factor.

August 23rd, Microsoft announce Balmer's departure.

http://www.microsoft.com/en-us/news/press/2013/aug13/08-23an...

Stock is up over 25% since then.

http://www.google.com/finance?q=NASDAQ:MSFT

I'd say there are some other people who agree with me that Balmer probably wasn't the right fit, and certainly overstayed his welcome.

I'm not arguing about Balmer, I'm saying that Bill's decision is probably nothing to do with Balmer or the state of the company. Why don't you re-read my original comment?

Here; I've highlighted the key parts for you:

" he's selling because he doesn't want the stock anymore therefore Balmer being replaced as CEO is unlikely to be an influencing factor."

Many things have happened since Aug 23rd that could affect the stock price. It's ridiculous to claim that such a change over such a timespan is due to only one event.

It's more likely this is simply diversification away from huge holdings of a stock that can change (up or down) by 25% in such a short period of time.

All the eggs in one basket and all that.

When Microsoft's new CEO Satya Nadella was selected, among the specific points he mentioned was an increased role to be played in the company by Bill Gates as "Technology Advisor":

http://www.microsoft.com/en-us/news/press/2014/feb14/02-04ne...

Microsoft also announced that Bill Gates, previously Chairman of the Board of Directors, will assume a new role on the Board as Founder and Technology Advisor, and will devote more time to the company, supporting Nadella in shaping technology and product direction. John Thompson, lead independent director for the Board of Directors, will assume the role of Chairman of the Board of Directors and remain an independent director on the Board.

"Bill Gates welcomes Satya Nadella as Microsoft CEO - YouTube" https://www.youtube.com/watch?v=M5BhQVuRcTk

As Alex Schleber (just some guy, but insightful IME) put it on G+:

But MOST WORRISOME of all is what he says next! - "I'm thrilled that Satya has asked me to step up, substantially increasing the time that I spend at the company... I'll have over a third of my time available to meet with product groups... and it will be fun to define this next round of products working together...".

YIKES! Precisely the thing that any outside CEO candidate was dreading, and likely making moving both Ballmer and Gates off the board a precondition for anyone to even consider the challenge (compare here: www.mondaynote.com/2013/12/08/microsoft-ceo-search-stalemate/ ).

https://plus.google.com/u/0/+AlexSchleber/posts/PRZMqdmChsK

I don't see how this is in any way related to my comment?

Steve Jobs kept one share of Apple so that he could still receive Apple's annual reports. Though probably not an issue for Gates who is still on the Board of directors.

According to some stories, Ballmer now owns more stock than Gates. I'm wondering if Ballmer will start selling off his stock and how investors will react to that.

Indeed. Strangely enough, one of those some is this very one. "According to documents filed with the U.S. Securities and Exchange Commission on Friday, Gates now owns just over 330 million Microsoft shares after the sales this week. Ballmer owns just over 333 million, according to Thomson Reuters data."

http://xkcd.com/605/ I'd like to point out that extrapolating like this is silly.

I don't think you read the article.

"Gates […] has sold 20 million shares each quarter for most of the last dozen years under a pre-set trading plan."

I have. It still looks like linear extrapolation, for a very complex system (the mind of a very smart human being).

"a pre-set trading plan".

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