Economics teachers love to use the “Bill Gates analogy” to explain opportunity cost to glassy-eyed high school students. The Microsoft founder makes so much money every second that it if he saw a $100 bill lying on the street, it would be a poor use of his time to pick it up – at least if it distracted him from a more productive activity.
However, humans aren’t perfectly rational beings, which explains why Gates once admitted he would pick up the $100 bill anyway.
Well, that decision now represents an even less efficient use of his time than it was yesterday, thanks to Microsoft stock’s Dow-leading 1.6% rally.
The move lifted MSFT shares to a new all-time high of $142.37, though they later edged down to $140.73. But don’t feel sorry for Bill Gates; the $2.21 per share increase added hundreds of millions of dollars to his net worth.
According to CNBC, Gates owns 103 million shares of Microsoft stock, which means today’s rally made him roughly $228 million richer.
Altogether, his Microsoft holdings are worth more than $14 billion and account for 1.4% of all outstanding MSFT shares.
Bill Gates’ net worth has jumped more than $16 billion in 2019, which is mostly a product of the stock market’s spectacular recovery. Unlike many older investors, he and his wife retain the majority of their investment portfolio (60%) in equities.
As CCN.com reported, Microsoft’s share price surge followed the tech giant’s announcements that it would embark on a $40 billion stock buyback spree and raise its annual dividend by 11%.
Microsoft had already spent nearly $36 billion on share repurchases since 2017 and still has around $11 billion left on a stock buyback program authorized in 2016.
MSFT shares have gained nearly 39% in 2019, giving the 44-year-old company a market cap of nearly $1.1 trillion.
And according to the Wall Street Journal, most equities analysts believe the stock has plenty of more room to run. As of today, 26 of 32 research analysts have a “buy” rating on MSFT, compared to just one “sell” rating.
Last modified: September 23, 2020 1:03 PM