Fomento Económico Mexicano, known as Femsa (FMX), surged to a fresh 52-week high of $141.47 on Tuesday, marking its 38th such milestone in the past year. The stock has climbed 26.4% in 2026 and 38.5% over the trailing twelve months, yet a compelling valuation argument suggests the rally has further room to run. The catalyst? Bill Gates’ investment vehicle, Cascade Investment LLC, has held a position since December 2007, and its conviction appears vindicated.
The Gates Connection: A 17-Year Holding
Cascade Investment owned 27.89 million American Depositary Shares (ADS) as of March 31, representing 8.2% of Femsa’s total equity and 10.71% of Cascade’s entire portfolio. The firm initiated its stake in December 2007, purchasing 10.8 million ADS for $390 million. Those shares are now worth approximately $1.53 billion, while the total position approaches $4 billion at current highs. Between June and July 2008, Cascade added 8.57 million ADS of Coca-Cola Femsa (KOF) at prices between $54 and $59. Femsa controls 56% of KOF’s voting shares and owns 47.2% of its equity.
The Holding Company Discount
Femsa operates as a holding company with four primary segments: OXXO Mexico (24,708 convenience stores), Americas & Mobility (OXXO stores in Brazil, Colombia, Chile, Peru, and the U.S. plus gas stations), Europe (2,749 convenience stores), and Drugstores (4,584 locations across Mexico, Chile, Colombia, and Ecuador). In Q2 2026, these units generated 154.68 billion Mexican pesos ($8.83 billion) in combined revenue, or 67% of the total, with Coca-Cola Femsa contributing the remaining 33%.
Based on KOF’s $22.84 billion market cap, Femsa’s 47.2% stake is worth $10.78 billion. With Femsa’s own market cap at $25.74 billion, the non-KOF businesses are implicitly valued at roughly $15 billion. Yet OXXO Mexico and Americas & Mobility alone produce approximately $24.35 billion in trailing revenue. Applying peer Alimentation Couche-Tard’s (ANCTF) 0.81x price-to-sales multiple yields a $19.72 billion valuation for these two units—exceeding the entire non-KOF valuation. At Casey’s General Stores’ (CASY) 1.82x multiple, the figure jumps to $44 billion.
Why the Discount Persists—and Why It May Close
The market applies a “holding company discount” to Femsa, partly because the Americas & Mobility segment carries low-margin gasoline revenue (0.7% operating margin in H1 2026 vs. 8.9% for OXXO Mexico). However, even a conservative $15 billion valuation for the convenience-store operations leaves the drugstores, European assets, and Spin by OXXO digital wallet fees effectively priced at zero. Thirteen analysts covering FMX in Mexico rate it Outperform with a 1.77/5 score (1 being strongest buy), suggesting institutional recognition of the mispricing.
Key Takeaways for Investors
- Sum-of-parts value: Non-KOF assets trade at a fraction of peer multiples.
- KOF exposure at a discount: Buying FMX offers indirect Coca-Cola Femsa ownership cheaper than purchasing KOF directly.
- Digital optionality: Spin by OXXO’s financial-services revenue is unvalued in current models.
- Smart money alignment: Bill Gates’ 17-year hold signals long-term conviction.
FAQ
- What is Femsa’s ticker and primary exchange? Femsa trades as FMX on the NYSE (ADS) and as FEMSAUBD on the Mexican Stock Exchange (BMV).
- How much of Coca-Cola Femsa does Femsa own? Femsa holds 47.2% of KOF’s equity and controls 56% of voting shares, giving it operational control.
- Why does a holding company discount exist? Investors typically assign lower multiples to conglomerates due to complexity, capital allocation opacity, and the risk of value-destroying acquisitions. The discount narrows when management demonstrates disciplined allocation or spins off assets.
Disclosure: On the date of publication, the author held no positions in the securities mentioned. This article is for informational purposes only and originally appeared on Barchart.com.
