Billionaires And Other Mysteries

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About a year ago, Eric O’Keefe came across information he found very curious: Somebody was buying large tracts of prime farmland in Washington State.  As Editor and Founder of The Land Report, a publication that keeps close track of major land transactions, he wanted to know who the buyer was. Sales of 1,000 or more acres are considered significant and get special notice in his publication.  This transaction was for 14,500 acres.  Moreover, the land was in Eastern Washington State, an area which has some of the most expensive farmland in the country.

O’Keefe discovered that the buyer was a small, unknown company based in Louisiana. But not only did this tidbit of information not answer the question, it raised new ones: Who bought so much land and why was so much secrecy involved?  He was determined to find out who the real owner was. 

After some more research, he got the answers he was looking for.  The Louisiana company was acting on behalf of Cascade Investment, an investment firm that manages Bill Gates’s billions, which stays out of the spotlight.  Gates is the third richest person in the world.

O’Keefe learned that Gates had quietly been acquiring farmland through subsidiaries of Cascade for several years.  O’Keefe already knew that Gates was also the owner of huge tracts of farm land in Illinois, Iowa, Louisiana, California, and a dozen other states. 

By adding those holdings to that in Washington State and other recent purchases, he calculated that Gates was the owner of at least 242,000 acres of farmland, which makes him the owner of more farmland than anyone else.  There is irony in this.  At the same time Gates, the co-founder of Microsoft, was putting more high tech into the lives of ordinary people, he was quietly buying significant tracts of choice agriculture for himself. 

Gates also has many other real estate holdings in addition to his farm holdings.  And among these, states The Land Report, is an investment in 40 sq. miles of land adjacent to Phoenix.  

So What Is Gates Up To?

“People want to know why Gates is acquiring so much land,” O’Keefe says.  The question is a timely one, and it appears that there are several answers.

The simplest is that Gates has so much money and keeps earning so much more that he needs a place to invest it - one that is not only safe but that also could appreciate over time.  Select real estate meets these criteria.

Another explanation refers specifically to the land he purchased in Arizona. Some of the partners in that venture recently issued a press release describing plans “to build a forward-thinking community...that embraces cutting-edge technology,” according to The New York Post.  And this community would boast a variety of new projects.

The press release generated speculation that “Bill Gates had started laying out his plans for creating a ‘smart city’ in Phoenix, Arizona,” according to Futurism. This city would be a “high tech metropolis that could be both a breeding and testing ground for futuristic technologies.”  (This sounds very similar to a small high tech city coming out of the planning stages in Nevada that we featured just a week ago.)

Still others speculated that Gates’s real objective is to reinvent farming - reducing greenhouse gases that are said to cause or contribute to global  warming, as well as pesticides that could be harmful to both people and the environment.

Most of Gates’s estimated $132 billion fortune is handled by Michael Larson, an investment expert who has worked for and with Gates since 1994. According to The New York Post, Larson invests Gates’s wealth in conservative investments.  The Post cites public records that show Gates own shares in Warren Buffett’s Berkshire Hathaway, a Coca-Cola bottling company, tractor manufacturer Deere & Co., and other non-glamorous but steady industries.  Larson is careful to diversify his holdings.  Gates also owns rare art.

Contrary to the impression many people have, farming is not necessarily working the land the same way parents and grandparents have for generations.  These days, many farmers are also involved with commodity investments, and a high percentage of their farmland is leased.   

According to Bruce Sherrick, a professor of agricultural economics at the University of Illinois at Urbana-Champaign, about 60 percent of farmland in the Midwest is leased, and the owners sometimes are wealthy investors - like Gates. 

“For investors who know what they’re doing, agricultural land offers financial stability in uncertain times,” he says.  Farmland has had a remarkably consistent ability to hedge against inflation.  It also tends to be “negatively correlated” against other investments.  In other words, when the stock market goes down the return on farmland usually goes up.

The Mysterious Bill Gates?

The public is aware of many of the wealthiest people in the world, but for whatever reason, Gates seems to generate the most curiosity.  Conspiracy theories about him spring up regularly.  Most of them are absolutely baseless, but in some cases, they nevertheless gain a following.  A new book he has recently penned and is promotes is not doing anything to discourage those theories.

The book is called How to Avoid a Climate Disaster: The Solutions We Have and the Breakthroughs We Need.  The title says it all and it endorses that idea that Earth is headed for a major climatological disaster that will end life as we know it.  Numerous other books and articles have been written about this subject.

Cynics say that his book is nothing but an effort to make many more billions by getting government funding “for every mad scheme he has ever invested in,” as the Economic Policy Journal (EPJ) puts it.  According to this publication, it›s not just Microsoft that Gates controls.  They say he “runs vast enterprises in many sectors of the economy.”  Moreover, they claim he is planning to get involved in many more, ranging from lab made mother’s milk to spraying particles in the atmosphere that will reduce sunlight that reaches Earth (in order to slow warming of the atmosphere). Still another theory maintains that he is buying farmland to produce ingredients to make meatless hamburgers.

More recently, Gates has become involved in energy.  Since he is acting as a private person in this venture, detailed information about his activities are not available.  This effort, however, has already garnered so many backers that some details have leaked out. And they are amazing. 

Gates started a company called Breakthrough Energy Coalition, and last September he contacted dozens of billionaires asking if they’d be interested in investing in new “long-term energy breakthroughs.”  Within two months, more than two dozen came on board, as did more than 40 companies and many other organizations.

Exactly who are these interested parties?  How does this list sound to you: Jeff Bezos, Saudi Prince Alwaleed bin Talal, Michael Bloomberg, manager of the largest hedge fund Ray Dalio, Richard Branson, David Rubenstein of the Carlyle Group, Chinese entrepreneur Jack Ma, the Chair of Fidelity Mutual Funds, and the Walton family of Walmart fame, among other heavy hitters. 

Breakthrough has also hired 10 senior “policy advocates” who are closely connected with some of the most powerful politicians and others who may not be as well-known but who work behind the scenes in very influential roles. It has also invested in numerous companies (too many to list here) that as a group are involved in solar energy, reducing CO2 emissions, geothermal energy, and greater energy efficiency, making food more healthful and improving agriculture.

So what are we to make of Breakthrough Energy’s ambitious plans?  The ordinary investor will probably be the last one to find out. But it’s a safe bet to say that with so many powerful backers on board, the anti-fossil-fuel efforts are in full gear, we’ll be hearing a lot more about the impending climate disaster, and that voices questioning the validity of global warming will be even fewer and farther between.

How much do Gates and Breakthrough’s other partners stand to earn from this project?  What new products and technologies might they be planning?  How may these affect existing businesses and the markets? 

Theoretically, by investing in companies involved in alternative energy, environmental control and food companies, and then influencing the government to introduce new regulations that would promote these businesses, spectacular profits could be earned.  Those who get involved in conspiracy theories might as well speculate about really juicy ones. 

Sources: www.economicpolicyjournal.com; www.nypost.com; www.nytimes.com; www.zerohedge.com