Philanthropist and Microsoft Founder Bill Gates’ current net worth stands at approximately $125-130 billion as of early 2026.

At one time, Gates had 44.9% of Microsoft shares at its 1986 IPO but sold most over decades to fund philanthropy via the Bill & Melinda Gates Foundation, retaining roughly 1% today. If he had kept his full original stake, adjusted for splits and Microsoft’s growth (market cap now over $3 trillion), estimates suggest his net worth could exceed $700-800 billion, surpassing even Elon Musk’s.

Ongoing donations totaling tens of billions reduced his Microsoft exposure, while diversified investments through Cascade Investment bolster his remaining wealth.

Microsoft stock appreciation since 1986 has multiplied original shares over 1,000-fold, highlighting the impact of his divestment.

Four people are in a train compartment: a young woman and her mother, and a young soldier with his boss, Colonel.

The train enters a dark tunnel and the compartment goes completely black. Everyone hears the sound of a kiss, immediately followed by a loud slap. When the train comes out of the tunnel, the boss is rubbing his cheek, and all four quietly sit there, each thinking something different.

• The Colonel thinks: “That young soldier must have kissed the girl, and she slapped me by mistake.”
• The mother thinks: “That older man kissed my daughter, but I’m glad she slapped him.”
• The young woman thinks: “That older man kissed my mother, but I’m glad she slapped him.”
• The young man thinks: “This was perfect. I kissed the back of my own hand in the dark and got to slap the Colonel.”

“The Road Not Taken” is Robert Frost’s famous poem about a traveler facing a fork in the road, contemplating which path to choose. It explores the ambiguity of choices and the hindsight of regret.

The Road Not Taken by Robert Frost

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;

Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same,

And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.

The Rule of 40 balances revenue growth and profitability for SaaS companies by requiring their sum to reach or exceed 40%.

Definition

The Rule of 40 adds a company’s year-over-year revenue growth rate (in percentage) to its profit margin, typically EBITDA margin, though alternatives like operating or free cash flow margins apply. Popularized by Brad Feld, it assesses sustainability in high-growth tech firms where pure growth or profit alone misleads.

Calculation

Compute as: Rule of 40 = Revenue Growth Rate (%) + EBITDA Margin (%). For example, 30% growth plus 15% margin equals 45%, passing the rule; 20% growth plus 15% equals 35%, falling short. Use trailing periods like three to twelve months for stability, and weight growth higher (e.g., 1.33x) for early-stage firms.

Usage in Investing

Investors favor scores above 40% as it signals efficient scaling without excessive losses, guiding valuations and M&A.

Track trends over time: improving scores indicate health, while drops below 30-40% flag risks in competitive markets. Mature firms may prioritize margins, while startups lean on growth.

Source:  https://www.paylocity.com/resources/glossary/rule-of-40/

Owner earnings represent the true cash flow available to a business owner after accounting for essential reinvestments, popularized by Warren Buffett as a superior measure to reported net income for valuing companies.

Definition

Owner earnings adjust net income by adding back non-cash charges like depreciation and amortization, then subtracting maintenance capital expenditures and changes in working capital. The core formula is: Owner Earnings = Net Income + Depreciation/Amortization – Maintenance CapEx ± Working Capital Changes. This metric reveals cash that could fund dividends, growth, or debt reduction, ignoring accounting distortions.

Owner earnings and free cash flow both measure a company’s cash generation but differ in focus, adjustments, and application for investors.

Core Definitions

Owner earnings, from Warren Buffett, start with net income, add back depreciation/amortization, subtract maintenance capital expenditures (not total CapEx), and adjust for working capital changes to reflect cash truly available to owners.

Free cash flow (FCF) typically equals operating cash flow minus total capital expenditures, capturing cash after all CapEx but without distinguishing maintenance from growth spending.

Calculation Challenges

Precise computation requires estimating maintenance CapEx, as companies rarely disclose it separately from growth spending, leading to subjective judgments. Variations exist, such as starting from operating cash flow or excluding working capital, but all aim to approximate sustainable cash profits.

Pros for Long-Term Investment

Owner earnings excels for value investors by focusing on cash generation over accounting profits, enabling better intrinsic value assessments via comparisons to market cap. Consistent growth signals operational efficiency and sustainability, outperforming peers in cash conversion. It prioritizes businesses with durable competitive advantages, aligning with long-term holding strategies.

Cons for Long-Term Investment

Estimates introduce imprecision, especially for capital-intensive or cyclical firms where CapEx fluctuates. It overlooks growth CapEx benefits, potentially undervaluing expanding companies, and demands deep financial analysis not suited for all investors. Volatile earnings or seasonal patterns further undermine reliability compared to standardized metrics like free cash flow.

Companies with high owner earnings (often proxied by free cash flow or earnings growth tied to cash generation) and high ROIC (Return on Invested Capital, typically above 20-30%) indicate efficient capital allocation and strong economic moats.

These metrics appeal to value investors seeking sustainable profitability. Recent screens highlight US-listed firms excelling in both areas.

Source:  https://strawman.com/member/uploads/objects/de/d778df06286d71562539ae921cd296c6827ef3.pdf