Gates’ Purchase Sparks Avista Rally Spokane Company’S Stock Gets Unusually Big Boost

Microsoft founder Bill Gates has purchased 5 percent of Avista Corp.

And word of his investment triggered wild trading in the Spokane energy company’s stock, which closed Thursday at $32.44 per share, the highest price in at least a decade and possibly far longer.

More than 2.8 million shares changed hands. Average daily trading before last week was only about 170,000 shares.

A little more than a week ago, the stock traded for less than $16. A glowing report by a Merrill Lynch analyst then ignited trading that lifted the price above $24 by the end of the week.

After trading quietly early this week, Thursday’s activity added $7.81 to Wednesday’s closing price.

Gates made his purchases through Cascade Investment LLC, the Kirkland, Wash.-based company that holds his non-Microsoft investments.

Cascade notified the U.S. Securities and Exchange Commission on Jan. 13 that its Avista holdings had climbed above 5 percent, but the investment was not reported until Thursday.

Cascade’s 1,787,500 shares represent 5.01 percent of the 35 million Avista common shares outstanding.

Investors must disclose their stock holdings in a company when they own more than 5 percent of the shares outstanding.

Analyst Jeff Hult of the Carson Group in New York said the Cascade purchases appear to have been deliberately cut off once the filing threshold had been reached.

The company, normally tight-lipped about its holdings, probably wanted to draw attention to Avista, he said. Hult said he did not know why.

Michael Larson, who manages Cascade’s investments for Gates, was unavailable for comment Thursday.

Hult said the timing of the company’s filing indicates Gates was able to build his position in Avista over several months when trading was light and the stock price was low.

“That’s the mark of a good investment manager,” said Avista Vice President Dave Brukardt.

He said Cascade representatives visited Spokane several months ago. Avista did not ask their intentions, he said, and was not aware Cascade was accumulating the company’s shares.

Brukardt declined to characterize Gates’ interest in Avista as either positive or negative. “We’re always pleased when others validate our strategy,” he said.

Brukardt said Gates is among the largest, but by no means is the largest, holder of Avista stock.

Jim Bellessa Jr., an analyst with D.A. Davidson, said Gates’ position in Avista stock is a positive development for the company and Spokane.

“Because of who he is and his understanding of technology, he’s given his blessing to the Avista story,” Bellessa said.

And not only do investors want to be on Gates’ coattails, he said, so do the kind of high-tech employees who might otherwise spurn a move to Spokane to work for Avista or a subsidiary.

Sam Brothwell of Merrill Lynch ignited last week’s rally in Avista. He said Thursday that Gates was likely attracted by two of the subsidiaries he focused on in his report: Avista Advantage and Avista Labs.

Avista Advantage has the premier utility e-commerce site on the Internet, he said, with substantial potential to add new products and customers.

And fuel cell technology like that under development at Avista Labs is looked on very favorably by investors, Brothwell added.

“There is substantial upside potential,” said Brothwell, who suggested in his report that both operations could be spun off in initial public offerings within a year.

Gates’ presence as an investor will not affect the timing of those potential offerings, he said.