Republic Services Inc. (NYSE: RSG) keeps seeing its largest shareholder buy stock.  This is none other than Bill Gates.  A fresh filing shows that Gates purchased 600,000 more shares at a price average of $26.12 for a total of $15.69+ million with a January 30 transaction date.  This is a drop in the bucket for one of the world’s richest men, but there are implications here.

Gates now holds 44,394,569 shares of Republic after hisCascade Investment LLC vehicle disclosed a 500,000 share purchase at anaverage price of $26.378 just yesterday.  That purchase date wasJanuary 29.

It also looks like the Bill & Linda Gates Foundation own additionalshares not counted in this filing, but we are just going with theindirect filing shares for this.  It now appears that Gates owns about 25% of the company.

There are huge barriers to entry for a garbage business that dominates in many cities.  They are too many to list,but trust us on the barriers to entry.  This leaves essentially Republic andWaste Management Inc. (NYSE: WMI) as the last two giants in the sector,although Waste Management is now about three-times the size of Republicafter the Allied transaction.

For Gates to keep amassing this large of a stake in Republic, he’s got to like more than just the company’s P/E ratio or its industry.  Gates has been out in front ofmany major changes (besides building a software empire) in rail,ethanol, and other businesses.  Now that gas is so cheap again and thatcommodity prices and demand are not making the cost of trucksprohibitive, the margins here have to be rising each week even if garbage volumes are down.

Republic Services closed today at $25.11, even lower than the lastpurchase prices and far lower than many of the other Gates’ purchasefiling prices.  The 52-week trading range is $18.25 to $36.52.   

Jon C. Ogg
February 3, 2009

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