Bill Gates doesn’t do things halfway. When the billionaire and Microsoft co-founder makes a move, it’s worth paying attention. While his portfolio still leans heavily on Microsoft (NASDAQ:MSFT), Gates has been quietly reducing his stake in the tech giant over the past year. And in the third quarter of 2024, he broke a yearlong investing hiatus to place a calculated bet on just two stocks.
But here’s the kicker: both are in the transportation sector. Yep, transportation — the same sector that just limped through 2024, lagging far behind the rest of the market. So, what’s going on here? Has Gates spotted a diamond in the rough, or is this just wishful thinking? Let’s unpack his latest moves.
Why Transportation, and Why Now?
It’s not exactly a secret that the transportation sector had a rough 2024. The S&P 500 Transportation Index lost 0.5% this year, compared to a jaw-dropping 27% gain by the broader S&P 500. Ouch.
But Gates clearly thinks the tides are turning. His third-quarter purchases — the only ones he’s made all year — suggest he’s banking on a recovery in 2025. That’s a bold bet, and not without risk. A sector that’s struggled this much could either be ripe for a rebound or headed for more turbulence.
Stock #1: Paccar (NASDAQ:PCAR)
Let’s start with Paccar. If you’re scratching your head wondering what Paccar is, don’t worry — you’re not alone. The company’s Peterbilt and Kenworth truck brands might ring a bell, though. They’ve carved out a 15% share of the Class 8 truck market (think the biggest, baddest trucks on the highway). That puts them behind Freightliner, which dominates with a 36.5% share.
Paccar’s 2024 started strong, with its stock soaring 27% in the first quarter. But like a truck running out of gas, it sputtered through the summer. Weakness in its truckload business didn’t help, and analysts started to raise their eyebrows.
Here’s where it gets interesting: Data from ACT Research shows Class 8 truck orders are still down year-over-year. But November brought a 21% bump from October, a flicker of hope for an industry that’s seen better days. Gates must think that flicker will turn into a flame. He scooped up 1 million shares of Paccar at around $100 each. A $100 million bet might not shake up his $45 billion portfolio, but it’s a clear vote of confidence.
Stock #2: FedEx (NYSE:FDX)
Now, let’s talk FedEx. This one’s a bit more familiar, but it hasn’t exactly had a banner year either. FedEx’s third-quarter earnings were, in a word, disappointing. The company slashed its full-year outlook, and Wall Street wasn’t thrilled.
Still, Gates saw an opportunity. He picked up another 1 million shares, adding to a position he already held. His timing? Right after FedEx’s rocky second quarter, when the stock was trading at around $273 per share.
What’s Gates seeing here? Maybe it’s FedEx’s decision to spin off its LTL freight business, FedEx Freight, into a separate company. The move, part of the company’s DRIVE plan to improve efficiency, could streamline operations and boost financial performance. Or maybe Gates just thinks the market overreacted to the bad news. Either way, he’s betting that FedEx has what it takes to bounce back.
Should You Follow Gates’ Lead?
Here’s where things get tricky. On one hand, Gates has a history of making smart, calculated bets. On the other, transportation is a notoriously cyclical sector, and a recovery is far from guaranteed.
Paccar’s fortunes are tied to heavy-duty truck demand, which hinges on economic growth. If the economy stumbles, those shiny new trucks could stay parked. And while FedEx has promising growth strategies, its recent stumbles are hard to ignore.
But Gates isn’t just gambling — he’s playing the long game. His investments suggest he’s not just expecting a recovery; he’s banking on a rebound that could last years.
Final Thoughts
Bill Gates didn’t get to where he is by playing it safe. His bets on Paccar and FedEx are bold, risky, and intriguing. Whether he’s seeing something the rest of us don’t or just rolling the dice remains to be seen.
So, should you jump on the transportation bandwagon? Maybe. But do your homework first. Gates might have billions to burn, but for the rest of us, every dollar counts.