
Bill Gates on track to own no Microsoft stock in four years - gdilla
http://www.reuters.com/article/2014/05/03/us-microsoft-gates-idUSBREA410YS20140503
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sjwright
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.

~~~
icantthinkofone
"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.

~~~
dopamean
needs vs wants

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cs702
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...](http://www.gatesfoundation.org/Who-We-Are/General-
Information/Foundation-Factsheet)

~~~
hnnewguy
> _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.

~~~
pflats
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.

~~~
webreac
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.

~~~
philliphaydon
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.

~~~
webreac
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.

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raheemm
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.

~~~
sjwright
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.

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

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

~~~
antoinec
which translates into $10M I think

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paul_f
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

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

~~~
mgkimsal
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.

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fozzieBoston
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

~~~
frandroid
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.

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higherpurpose
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).

~~~
fozzieBoston
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.

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eddieroger
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.

~~~
bpicolo
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.

~~~
abelsson
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...](http://en.wikipedia.org/wiki/Bill_%26_Melinda_Gates_Foundation#Lifespan)

~~~
nickstinemates
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.

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brosephius
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.

~~~
patja
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.

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

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

~~~
thom
Sci-fi memorabilia doesn't buy itself.

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samspenc
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...

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dbg31415
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.

~~~
comlonq
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.

~~~
dbg31415
August 23rd, Microsoft announce Balmer's departure.

[http://www.microsoft.com/en-
us/news/press/2013/aug13/08-23an...](http://www.microsoft.com/en-
us/news/press/2013/aug13/08-23announcementpr.aspx)

Stock is up over 25% since then.

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

~~~
comlonq
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."

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icantthinkofone
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.

~~~
igravious
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."

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spiritplumber
[http://xkcd.com/605/](http://xkcd.com/605/) I'd like to point out that
extrapolating like this is silly.

~~~
gwern
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."

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

~~~
gwern
"a pre-set trading plan".

