Bill & Melinda Gates Foundation Trust

Bill & Melinda Gates Foundation

Michael Larson has steered the money behind the Bill & Melinda Gates Foundation since 1994, when Bill Gates hired him to manage the Microsoft founder's personal fortune. Gates plucked the then-34-year-old money manager out of an attempt to buy a Chicago firm, and Larson set up Cascade Investment to do the job. A Claremont McKenna economics graduate who finished an MBA at the University of Chicago by age 21, he had earlier cut his teeth in mergers and acquisitions at ARCO and managed bond funds at Putnam Investments. Cascade has kept the same quiet, low-profile character under his leadership for three decades. In October 2006 the foundation was split into two: a grant-making arm and a separate investment entity, the Bill & Melinda Gates Foundation Trust, created to hold and manage the endowment. The restructuring was prompted by Warren Buffett's pledge that year to give the bulk of his Berkshire Hathaway fortune to the foundation, a gift worth roughly $31 billion when announced. Bill Gates serves as trustee, while Larson's Cascade team makes the investment calls independently of the foundation's staff and board, a deliberate wall between the charitable work and the money that funds it. Larson runs the Trust the way he runs any pool: a concentrated, long-term value portfolio of large, durable businesses with strong market positions. For years the single biggest holding was Berkshire Hathaway stock donated by Buffett, at times nearly half the portfolio. There is no activism and little trading—just patient ownership of companies he expects to compound for decades, with proceeds handed to the foundation as its global health and development programs need them.