To recap the last two-months in a few lines, Microsoft Corporation (NASDAQ: MSFT) was courting Yahoo! Inc. (NASDAQ: YHOO), but the reality is Microsoft doesn’t want Yahoo so much as it just wants to be able to compete online – which basically means competing with Google Inc. (NASDAQ: GOOG). Well, besides an imminent partnership with Yahoo, Microsoft has long been rumored to want to make a play for Facebook beyond the 1.6% it already bought for $240 million last October.

Bloomberg has released a tiny item saying “Facebook Inc. Chief Executive Officer Mark Zuckerberg has no plans to sell the social-networking site, even if Microsoft Corp. offered $15 billion.” This is based on Zuckerberg’s comments at All Things Digital that, “the goal of the company is to execute on the things we talked about before,'' meaning share information about themselves and their lives more easily.

Despite this, many people have said similar things before about selling – but money talks. News site IDG.NO speculates in “What if Microsoft Bought Facebook?”

“An interesting rumor has surfaced: Microsoft would buy Yahoo Search, then spend a further US$20 billion to buy Facebook. Despite what Mark Zuckerberg says about Facebook remaining independent, it would be difficult to forego that rich an exit.

Facebook is one of several social networks, second only to MySpace and growing rapidly. But while MySpace is still larger, it is the flow of information through Facebook, and the social engagement of its members that makes it important.

Purchasing Facebook would give Microsoft access to over 60 million captive, and very social users, who could potentially be used to drive the growth of Live Search -- as well as access to all of their information, and in some cases their entire social lives.

Robert Scoble suggests that this would allow Microsoft to lock Google out of a huge chunk of internet information.

Buying Facebook might give Microsoft a small temporary boost. On the other hand, more than 140 million copies of Windows Vista with an Internet Explorer search box directed right to Microsoft Live Search haven't helped much. And Microsoft hasn't really been able to capitalize on user volume of existing services such as Hotmail or MSN instant messaging.

But let's step back a little. Microsoft hasn't detailed its plans yet, and a talk of its plans relating to Facebook is mostly rumor and conjecture. Still, if I were Google, I wouldn't worry too much just yet.”

Microsoft Corp. (NASDAQ: MSFT) co-founder, former CEO, recent “Chief Software Architect,” and world’s richest person for 13 years Bill Gates is not known for his investing so much as his business leadership – he didn’t invest in Microsoft, he built it. Nonetheless, Bill Gates is a pretty savvy guy, and he presumably has very savvy guys managing his investments (with a best friend like Warren Buffett, one would hope at least).

Obviously Gates’ wealth comes from Microsoft, but he has made a significant effort over the years to diversify his holdings through his private fund Cascade Investment LLC. In a recent The Motley Fool piece, some of Cascade’s holdings were examined:

•    Berkshire Hathaway (NYSE: BRK.A)
•    Canadian National Railway (NYSE: CNI)
•    Otter Trail (NASDAQ: OTTR)
•    Republic Services (NYSE: RSG)
•    Six Flags (NYSE: SIX)

Berkshire Hathaway is not surprising, given Gates’ relationship with Buffett, and the good sense for anyone, regardless of whether you personally know the Oracle, of investing in the company.

Cascade also seems to have a penchant for unglamorous businesses like railroads, Canadian National Railway, and trash disposal, Republic Services – both of which have done well for Cascade over the last 12 months, returning 7% and 13% respectively.

To investigate Cascade yourself, look for its 13-F filing with the SEC.

Barron's recently ran an interesting story on an activist hedge fund we follow called The Chilren's Investment Fund. The article interviewed founder Christopher Hohn, who unveiled some very interesting points and gave unparalleled insight into one of the most profound activist hedge funds in today's markets.

Hohn acts very similar to Warren Buffett in that he purchases hard-asset companies that are well-positioned and enjoy a near-monopoly, where there is a high barrier to entry, and which are under-researched and undervalued. The difference is that this investor likes to look for situations where poor management is undervaluing the firm.

The Children's Fund is well known for pushing management to pursue shareholder-friendly activities like share buybacks and special dividends designed to unlock value. Indeed, he has also seen great success by saving companies like Deutsche Borse from bad takeover attempts that undervalue the company.

Another important question answered in the interview was how such an innocent name - The Children's Fund - was assigned to such an aggressive hedge fund. It turns out that Hohn's wife wanted a fund that could help the poor, so this fund donates a portion of its profits to a non-profit organization that helps children in developing nations.

The rest of the interview can be read here.

But the big question is then: What stocks does the Chilren's Investment Fund own now? A quick look at their recent Schedule 13F-HR filing with the SEC shows a portfolio of just nine stocks - some popular and some unknown. The hedge fund's largest holding - not surprisingly - is in Union Pacific Corp., while CSX Corporation comes in second place. However, there are also many unknown names like Martin Marietta Matls on the list.

Here is the complete list:
1. Transalta Corporation (TAC)
2. Sterlite Inds India Ltd (SLT)
3. CSX Corporation (CSX)
4. CME Group, Inc. (CME)
5. Martin Marietta Matls Inc. (MLM)
6. Mastercard Inc. (MA)
7. Nymex Holdings Inc. (NMX)
8. Union Pacific Corp. (UNP)
9. Vulcan Materials Co. (VMC)