Business manager Michael Larson has a portfolio of billions of dollars and a client list of one.
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Larson, a former bond investor with Putnam Investments, picks stocks for Cascade Investment LLC, whose sole owner is Bill Gates.
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Larson is known as a conservative investor who maintains a low profile. However, regulatory filings by Cascade provide a glimpse into the decisions he and his boss are making.
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At the end of 2007, Cascade reported $4.2 billion in publicly reported securities. More than $570 million was in Berkshire Hathaway, the company headed by Gates’s good friend Warren Buffett.
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Cascade also holds a 10.8 percent stake in GAMCO Investors, Inc., a firm led by Mario J. Gabelli. Gates and Gabelli have done business in the past. In 1999, Cascade loaned $25 million to Gabelli’s local telephone venture, the Lynch Interactive Corporation.
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Cascade’s biggest investment was in the Canadian National Railway, with holdings worth more than $1.6 billion.
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Other bets by Gates’s investment vehicle included the Mexican media company Grupo Televisa, the Mexican brewer Fomento Economico Mexicano and the waste-management company Republic Services.
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Gates has invested in several energy ventures, including ethanol producer Pacific Ethanol and PNM Resources, a utility based in Albuquerque, NM. Another investment, Minnesota-based Otter Tail Corporation (NASD: OTTR), provides electric power, as well manufacturing and health services.
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Cascade has lesser investments in two companies that have seen their stock price decline in recent months – Six Flags Inc. (NYSE: SIX) and Planetout (NASD: LBGT). PlanetOut, a publisher targeting gays and lesbians, announced earlier this month that it would sell its magazine and book divisions and focus on its online activities.
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Cascade Investment was so-called because “Cascade” is a generic business name in the Northwest. No sense in drawing undue attention.
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Larson, who has worked for Gates since 1994, generally stays out of the limelight. However, in a rare interview with Fortune in 1999, he said he had the best job in the world.
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“It’s pure investing,” he said. “No marketing. Not much management. And client relations is limited to one guy.”
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