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In January 2021, Bill Gates became the largest owner of farmland in America, now owning over 242,000 acres of farmland!
While he doesn’t currently own the most amount of private land in America, Gates’ farmland portfolio now accounts for 2% of the total land in the United States of America.
Many people wonder why Bill Gates would make these moves with his investment portfolio.
- Is this simply a diversification of Gates’ massive tech investment portfolio?
- What special interest does Bill Gates have in farmland?
- Should we be worried about a tech giant like Bill Gates amassing this wild amount of land?
- Is this just a regular investment move, made on a large scale?
- Does this investment say anything about the state of the stock market?
- What does Bill Gates know that we don’t?
- How can this inform our personal investment decisions?
Today, we’re going to answer these questions, in ridiculous detail.
In order to fully understand and answer these questions, we’ll need to take a look at Bill Gates’ major financial moves throughout his career at Microsoft up until now.
Grab some popcorn, we’re going for a ride.
The Year is 1994: Enter Cascade Investment, LLC
Microsoft has seen almost a decade of continual major success since Microsoft’s IPO in 1985.
The 80’s were a massive boon, with Microsoft growing over 30% during it’s first 4 years public, and continued to expand by around 15% until Gates made his next big move: Cascade Investment LLC.
In 1994, Bill Gates opened up his family office, Cascade Investment LLC, with trusted wealth manager Michael Larson. For the foreseeable future, Gates would sell portions of his personal stake in Microsoft stock each year, and reinvest it through Cascade Investment.
When Microsoft launched their initial public offering to the New York Stock Exchange, Bill Gates held on to around 45% of the company’s original stock.
This is starkly different from most IPO’s, where the founding members of the company sell a wide majority of their shares of ownership to public investors to gain new capital.
Because Microsoft was doing so well prior to their public offering, they didn’t need to rely on the income from the in flux of investors, and thus, didn’t need to sell off the wide majority of their stock.
Cascade Investment LLC from the get go began to invest in solid companies, including Four Seasons, Berkshire Hathaway, Coca Cola, and many other tried and true ‘defensive’ stocks.
Based on Bill Gates’ budding friendship with Warren Buffett, it seems that Cascade has adopted much of Buffet’s approach to investing: invest in good companies, and hold long term to see healthy returns.
In 1999, Cascade Investment made an interesting decision: Gates sold over 7 million of his personal Microsoft shares to diversify his portfolio.
This position in Microsoft was quickly funneled by Cascade Investment into this long term growth strategy. It was near-perfect timing too, as 2000 would quickly see the infamous tech crash of “dot com” stocks.
While Microsoft took a major hit in the tech crash of 2000, Bill Gates’ portfolio with Cascade would gain around 40% return in that same year. Talk about big bets.
“So, what does this have to do with farmland?”
Don’t worry, our story hasn’t fully unfolded yet.
As we set the stage, we see that Bill Gates and Cascade Investment have made some very shrewd decisions with how they allocate the funds from their massive business victories.
Although some of Gates’ success may have been making more short term decisions ‘at the right place and the right time’…
The bottom line is that Bill Gates was right about most of his investment decisions.
By divesting his personal wealth from his own thriving tech company, and diversifying into myriads of other non-tech based businesses, he was not only exceptionally protected against the tech crash of 2000, but made out like a bandit.
Not only was he no longer reliant on his own company’s success for his own personal wealth, but he set himself up to make even bigger moves in the decades to come.
But 2000 wouldn’t just be the year that Gates’ estate would rise against his tech peers’ downfall. At the turn of the century, Gates also launched what would become his next major life’s work…
The New Millenium: The Bill And Melinda Gates Foundation
In 2000, Cascade Investment LLC and Microsoft became second fiddle to what would become Bill Gates’ “lead guitar” – The Bill and Melinda Gates Foundation.
Many considered this to be the beginning of something great for humanitarianism, science, the environment, and humanity at large. Others shuddered at the power it would hold.
Merged from the William H. Gates Foundation and the Gates Learning Foundation, The Bill and Melinda Gates Foundation would quickly become the largest private foundation in history.
In 2000, the new Gates foundation launched with Bill, Melinda, and Warren Buffet on the trustee board. Bill left most of his professional work at Microsoft at this time to work with Melinda and the foundation.
In the past 20 years, the foundation has grown to hold over $48 billion, and has funded myriad research facilities and humanitarian operations, focusing on overcoming diseases, climate change, agricultural research, and health and nutrition in underdeveloped areas.
The Gates Foundation has given millions and millions of dollars in grants to organizations such as the GAVI Alliance, the World Health Organization, PATH, UNICEF, and Johns Hopkins University.
Though the Gates Foundation has spent so much time and resources on helping humanity – more than any other private entity in history – the sheer power their enterprise wields has drawn the attention and fear of many.
Some of the biggest critics of Gates have deemed his philanthropy as a budding ‘technocracy’ – a “tyranny of experts” that both centralizes power into a private corporations’ interests.
Gates’ critics claim the means by which this supposed technocracy gains power is through implementing “band-aid solutions” that don’t fully understand or respect the context and conditions of the impoverished peoples they claim to help.
Critics claim technocrats use this method of assistance as a means to consolidate power; insufficiently enacting solutions that create reliance on the philanthropist.
The Gates Foundation has been largely transparent at every level of their operations – from their objectives, means, successes, and failures.
In their 2018 annual letter, the Gates Foundation answers the top ten questions they received, and they admitted that they didn’t think it was fair that their family had so much global influence. Gates also owned up to the various failures in their initiatives, and admitted that they try their best to leverage the expertise and wisdom from the community leaders present in the areas they aid.
Even Superman had his detractors.
“Whoah. That’s wild stuff. When do we get to the FARMLAND?”
Okay, fine. You want to see where farmland plays into this Microsoft mogul’s plans?
Well here we go.
A Small Intro Into Farmland Investment
So, you may have never heard about farmland before you heard that Bill Gates is buying what sounds like ALL of it.
Farmland is what is known as an ‘alternative asset’ – an investment that can grow wealth outside of the stock market. There are many budding markets for alternative assets, like real estate, fine art, foreign stocks, cryptocurrencies, even NFT’s.
One main draw to alt assets – especially for those who’re heavily invested in said stock market – is you can diversify your overall investment portfolio outside the NYSE/NASDAQ.
This is especially helpful if, say, the stock market crashed, and you had a more aggressive stock portfolio (or any large stake in stock at all).
Where farmland differs from other alt assets is that because it’s such a crucial human resource (food = humans), in less-than-desirable economic situations, farmland tends to appreciate even further in value, as opposed to losing value (I.E., during a dreaded stock market crash).
Because of this ‘crucial’ factor inherent to farmland, it also tends to provide better, consistent returns during times where inflation rises – another scenario where more ‘traditional’ assets like stocks and real estate suffer in.
Also, because you’re investing in the land itself, your investment not only is quite resistant to depreciation, but also provides some solid tax benefits due to be land ownership. You’re not investing in a building that will decay over time, but the rich farmland itself.
There’s a lot of little benefits that stack up when talking about farmland, but the biggest is probably the fact that farmland returns historically out performs most other investment vehicles, and is also comparatively the least volatile asset among the bunch.
“Why doesn’t everyone just invest in farmland then? Why am I just learning about this NOW?”
Well, as with everything in life, there is always a trade-off – especially in finance.
Farmland has some natural ‘built-in’ drawbacks for all of the built-in benefits:
- Farmland requires a paid tenant (a team of farmers) to work the land in order to create revenue
- Vacancies can create periods without return
- Weather and natural disasters are real risks involving farmland
- American farmland produces a lot of exports, and as foreign relations sour, more tariffs on produce can become likely, hurting your return
- Farmland has some of the lowest liquidity among assets – you can’t just sell off your entire portfolio in a day
- It’s a little harder to ‘break into’ farmland than other assets, though this is changing
20 years ago, it was difficult to invest in farmland if you weren’t already independently wealthy. You either had to directly buy the land, and buy many acres or entire estates at once, or go through a lot of hassle to functionally create an investment like a bond.
In the same way you can invest into ETFs (Exchange Traded Funds) in the stock market, there exist similar products for farmland. There also exist farmland REIT’s (Real Estate Investment Trusts).
However, there are also countless farmland investing platforms gaining traction now too.
|$15,000 To $25,000||View Investments|
For our Bill Gates story, the biggest take-away to remember is that a farmland investment is a great hedge to protect portfolios that are heavily invested in the stock market (I.E. prone to a stock market crash, or to rising inflation scenarios).
And now, back to our favorite mogul.
The Year Is 2015
The Gates Foundation has seen steady success and growth since their launch, funding science, research, agriculture and education.
Bill and Melinda released their latest initiative, “Bill Gates’ Big Bet”, where the Foundation states they’re betting on the major success of developing nations within the next 15 years, hoping to see more improvement than at any time in history.
The Gates Foundation has focused their efforts on alleviating the aftermaths of climate change since its founding. In their Big Bet, they recognize that the impoverished people stand to be impacted the most by these changes.
Gates believes that subsistence farmers and impoverished peoples will be among the most affected by climate change, because of more intense seasons of drought and rain. Due climate change, dry seasons will be drier, and wet seasons will be more intense, and bring more flooding.
While the global climate change initiative is trying to reduce total emissions by the year 2050, the year 2030 is also important. Essentially, by year 2030, the estimated results of what carbon emissions (and their effect on the environment) will look like in 2050 will be decided in full.
Thus, in Gates’ mind, it’s extremely important to help empower these developing peoples before that year comes to fruition.
The main outline of the Big Bet is:
- Eradicate major diseases such as polio, malaria, and HIV
- Reduce child death by half across the developing countries in Africa
- End starvation in Africa
- Educate and empower small-holder farmers through mobile banking
Featured in the agricultural side of their plan is a strategy for subsistence farmers and other small-acre farms in Africa and the developing world education, resources, and layaway payment plans which can be used through smartphones.
These subsistence farmers can order equipment and seeds they need, paying what they can over a longer period of time.
Another main feature of the Big Bet is the implementation of the culmination of the Gates’ Foundations research: specialized GMO seeds for different crops that have been gene edited to be “pest-proof, flood proof, disease proof, and climate change-resistant”.
Partnering with Monsanto to create these super seeds is also part of the plan.
With all of this recent farmland accumulation, one might think Gates is using this land to research these gene edited super seeds.
Interestingly enough, though the Bill and Melinda Gates Foundation is working on this agriculture initiative, Gates’ personal farmland portfolio is managed by Michael Larson and Cascade Investment. Cascade Investment began purchasing farmland in significant strides in 2013.
The Gates Foundation isn’t the entity utilizing the land, but rather just Bill’s family office. As we learned above, in most farmland investment situations, the farmland owner leases their land to tenant farmers, who usually live on and work the land.
Bill And Ted’s Excellent Prediction
The more explosive part of Bill Gates’ 2015 (in hindsight) was during a little Ted Talk, titled “The next outbreak? We’re not ready.”
In his Ted Talk, Gates predicts that the next major threat to the global community is much more likely to be a highly infectious virus or bio-terrorism, instead of a world war.
He also drives home the fact that the global community is massively under prepared if a major outbreak were to spread.
“This is a serious problem. We should be concerned.” – Bill Gates, 2015
In the conference, Gates proposed solutions for the international exposure to potential pandemic situations, and urged his listeners to prepare, in a confident manner.
In 2021, as we know, the outcome of the COVID-19 pandemic has created a slew of new problems, felt by everyone:
- A frustrated, isolated work force
- Rising rates of unemployment
- Small businesses bankruptcy en masse
- A litany of US government aid (printing over 20% of the current amount of USD in circulation)
- The impending rise of inflation of the US dollar – the standard that the global economy has centered itself around.
These conditions are also circumstances which are known to cause the value of farmland to rise.
Nobody here is claiming Bill Gates was planning on profiting from an eventual pandemic situation.
If any modicum of respect is to be given to the Gates’ Foundation desire to help underdeveloped nations, and the sheer amount of money, research, and resources spent to help those people, it is difficult to assume the worst and retain intellectual honesty.
The bottom line is, once again, Bill Gates was right.
The pandemic that would change the world (and still is), was right on it’s way to all our doorsteps.
The Current State Of Play
Bill Gates now owns the most farmland in the US, and many people are asking themselves “why?”
When interviewed by CNBC about his investment strategy, Gates stated that he follows Warren Buffett’s philosophy: invest in great companies, hold long term, and you will see success.
Based on this information, Cascade Investment LLC may simply be operating in standard, tried-and-true approaches to diversification: a healthy farmland investment is a great asset in high inflation economies, and has steady return over a long period of time.
While the Gates Foundation does have initiatives revolving around agriculture, environmentalism, developing countries, and now synthetic biology, the Gates Foundation and Cascade Investment have made it known that they are entirely different entities (though Michael Larson manages both funds), and they do not collaborate with each other.
Why Is Bill Gates The Largest Owner of Farmland In 2021?
Officially, the general public doesn’t know exactly what Bill Gates’ growing farmland estate is being used for. However, when you read between the lines with an objective and open mind, one can infer much.
As Bill Gates is one of the richest men in history, he can obtain resources needed much easier than even the most cunning young business people around.
Though it may seem like the massive farmland in his personal portfolio would be convenient for the projects the Bill and Melinda Gates Foundation are doing, the truth may be more mundane than some might desire.
Farmland is a great asset to passively manage. Consolidating and merging all of his farmland, and utilizing it for production of specific directives would require a massive amount of logistical strain and focus.
That being said, the public still doesn’t exactly know what the land is being utilized for, or if it’s being actively managed in a substantial manner by Gates.
Whatever you may think about the man himself, he has consistently made investing choices that brought him unusual and incredible returns, and this has brought him great wealth when others made the wrong fiscal moves, and lost much.
Bill Gates was right when he sold his own Microsoft stock to diversify through Cascade in 1994.
Bill Gates was right when he predicted the COVID-19 epidemic in 2015.
Bill Gates is now the biggest owner of farmland in 2021 – a great hedge asset against rising inflation.
If you’ve been on the fence about getting into farmland, maybe now is the time to reconsider.
Check out some farmland investments here:
If you’ve just learned about farmland today, today might be your best shot at investing in farmland yourself.