World News

The divorce of Bill and Melinda Gates pays attention to the money manager for Business and Economic News

For nearly three decades Michael Larson has quietly mingled around one of the world’s greatest fortunes with his top priority: Keep his superb wealthy owners out of the headlines.

Conservative bets, undescribed office, generic sound name of investment company; they were all carefully designed to protect Bill Gates and Melinda French Gates from criticism and to return constant, though seemingly unimpressive, returns.

The couple’s divorce announcement broke a healed image last month. Unfamiliar details were leaked, a report alleging that Larson allegedly harassed and bullied some employees.

On Monday, a spokesman said Bill and Melinda Gates Investments – a strong group of 100 people led by Larson, overseeing their personal fortunes and their approved foundation – had changed their name to Cascade Asset Management Co.

The name resembles Cascade Investment, which has historically been part of BMGI, which manages Gates ’personal wealth.

“The new name is to enable the evolutionary needs of the Gates family and their philanthropic work,” a spokesman representing Cascade said in an email. “The name change will not affect the team’s investment strategy or organizational structure.”

The brand is the latest step in the story of what will happen to one of the world’s greatest fortunes when Gates and French Gates end their divorce.

The vast portfolio held by Larson, estimated by Bloomberg News to be worth about $ 170 billion, has generated profits that have earned the broad stock market about a percentage point over the years, according to financial files and people familiar with the subject.

The record shows the priorities of the major strata of the ultrarich, where investment horizons for generations and risky bets often do not exceed the value of good repute. Part of Larson’s job was to help Bill Gates maintain his image as an honest billionaire dedicated to solving the world’s challenges, rather than making bold moves that could make the study.

“The price that some of these boys are willing to pay to stay out of the news is high,” said Tayyab Mohamed, one of the founders of the company that hires family offices to hire Agreus Group.

Recent revelations about divorce and Cascade’s workplace culture reported by the New York Times raise questions for Larson, who oversees the majority of Gates ’personal wealth through Cascade and directs a $ 51 billion Bill and Melinda Gates Foundation endowment. .

French Gates, in particular, has been in the spotlight when Cascade transferred more than $ 3 billion in equity stakes to it, prompting some in the industry to think it is in the process of claiming even greater control of the share of wealth. Their combined wealth is more than $ 140 billion, according to the Bloomberg Billionaires Index.

Larson, 61, admitted that he sometimes used harsh language when reporting to the Times newspaper, but denied that he had treated his employees badly. A spokesman for Cascade said the issues have been examined and not ruled out. A representative from Gates did not respond to the request for comment.

Mohamed said it’s no surprise that Larson has continued in his role after the allegations, given his decades-long tenure with Gates and probably the loyalty he has generated.

“If Larson hadn’t had a professional impact, it would have been easy yes, he would have had to resign,” said Mohamed, as his company helps the family office fill leadership positions.

Larson, often dressed in a pink shirt, shudders at the light and rarely attends conferences for family office professionals. A former bond fund manager, Bill Gates was hired in the mid-1990s and won the loyalty of the billionaire by giving consistent benefits and thinking employees were focused on protecting their benefactor’s reputation, according to people they knew. Cascade asked not to have a name to talk about the internal workings of the company.

They both said Gates had a wide range of options in his investment decisions. French Gates rarely attended the early days of Cascade, leaving aside the annual meetings, and when he did so he tended to be a passive participant, according to people familiar with the company.

Most of the allegations about Larson were not reported “due to a lack of ownership and control of BMGI,” spokeswoman Courtney Wade said in a statement, using an abbreviation of Bill and Melinda Gates Investments, Cascade’s parents. BMGI also manages the foundation’s endowment, both of which are listed as trustees.

It is unclear where Gates of France keeps his money, whether more than $ 3 billion has been transferred from Cascade and whether he is now setting up a family office. He also runs Pivotal Ventures, an investment and incubation company created in 2015 that focuses on gender, gender and racial equality and employs approximately 90 people.

Conservative mandate

Being the investment leader of one of the world’s richest people might seem like an enviable job for someone who is considering creative bets for investors. There is almost no concern about raising money, taking out customers, or tedious regulations. But often it is to keep wealth stable.

In addition to distracting Gateses, Larson’s main mandate has been to invest in a conservative way: try to maximize profitability, but don’t lose money, one person said.

This reflects the typical investment approaches of large family offices and foundations, said Raphael Amit, a professor of management at Wharton School at the University of Pennsylvania.

“The goal of No. 1 is to conserve capital,” he said, which is why family office portfolios are diverse, including not only public assets but also fixed income, assets and assets such as art.

In a Fortune story from two decades ago, Larson explained that a large part of his strategy was reduced to dealing with fluctuations in Microsoft shares. At the time, both the foundation’s and Gates ’personal money portfolios were mostly bonds, with some bets on private capital, raw materials, Florida real estate, and British hotels.

That has changed. Cascade currently has about $ 57 billion in public assets, Deere & Co. starting with the farm equipment manufacturer and starting with the Canadian National Railway Co. monitors operator Waste Management Republic Services Inc. companies – companies rooted in the physical world of making, moving and selling goods. , and cleaning things up.

Cascade also owns 270,000 acres of land, enough to become the largest owner of agricultural land in the U.S., according to the Land Report. The company has also been involved in foreign exchange and commodity trading, venture capital and the development of a complex property in central Tampa.

The foundation’s latest tax returns also show a $ 804 billion corporate bond and other $ 5.8 billion investment, such as mortgage guarantees, bank loans and sovereign debt.

Stable returns

Cascade does not disclose the overall return on its investment, but the foundation’s financial reports provide clues. The assets of the foundation managed have returned an average of about 8.6% a year since 2001, according to a person familiar with the subject, which has exceeded the annual average gain of the S&P 500 Index over the past two decades. Another person said it is indicative of Cascade’s overall profitability.

Cascade’s assets have been regularly boosted by Gates ’earnings from sales of Microsoft shares. And Warren Buffett, the billionaire founder of Berkshire Hathaway Inc., has regularly donated billions of dollars to the foundation in the conglomerate. Buffett is one of the three board members of the Gates Foundation along with Gates and Gates of France, but according to the foundation has no involvement in the investment decisions of the endowment.

One notable feature of the portfolio is how little it changes. Of the 15 shares listed in the foundation’s latest trust file that disclose positions traded on U.S. exchanges, 10 of them were in the portfolio a decade ago.

Farms have not aligned themselves with Gateses ’charitable efforts or priorities, including global health and, more recently, climate change.

Cascade made investments in oil and gas companies until 2019. He has long been the main owner of Signature Aviation Plc, the world’s largest private jet operator, before joining a private company that took over this year. And he is the largest shareholder in Republic Services Inc., has been fighting with the Teamsters of International Brotherhood of Union for years, and the members are employees.

Gates has occasionally made it clear that Larson has a wide discretion in making investment decisions. At a “Ask Anything” event on Reddit in March, a user asked about farm land purchases. His response: “My investment team chose to do that.”

Two decades ago, Larson said it in a clearer way.

“When people know that Cascade has invested in something, that’s not Bill Gates,” Fortune said in an interview. “I’d like everyone to understand that.”

(Updates to rename BMGI in the fourth paragraph.)
-With the help of Steven Crabill.




Source link

Related Articles

Back to top button