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TheStreet Open House

Invest Better Than Bill Gates

Some characteristics stand out immediately. For one, there's no Microsoft (MSFT). Why should there be? For us, Microsoft is an investment. For Gates, the software company's chairman and co-founder, it's his piggy bank.

Another salient characteristic of the portfolio is that it contains no tech stocks. This, too, makes sense. Why should Gates invest in the competition? Since Microsoft is not in his portfolio, I chose not to include it in my Better Than Bill Gates portfolio.

I started with Canadian National Railway (CNI), Gates' largest investment, worth nearly $1.4 billion and representing 37.7% of Cascade Investments' portfolio and 5.8% of CNI.

Railroads have been a hot area for super investors, and with good reason. As I discussed with Jim Cramer in a May video for TheStreet.com TV about railroads, rail transportation is more cost effective than truck transportation.

Warren Buffett, who is a good friend of Gates, owns Norfolk Southern (NSC), Union Pacific (UNP) and Burlington Northern Santa Fe (BNI).

Canadian National is putting up good numbers. In the first quarter of 2007, it returned 20% on equity, far better than the industry average of 14.7%. For that reason, I believe Canadian National is a keeper.

Next is Republic Services (RSG), a Florida-based waste disposal company, in which Cascade invested $756 million, representing 20.6% of Cascade's portfolio and 14% of the company.

Waste disposal is a booming business. The Dow Jones waste and disposal services index has been outperforming the S&P 500 since the spring. That said, is Republic Services the best choice in the sector?

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