Cascade Investment LLC, the fund managed by Microsoft chairman Bill Gates, has made good on its November promise to exit from its investment in Pacific Ethanol. What's surprising? He's doing it at a loss, converting his preferred shares to common shares worth $8 apiece and selling them for less than $4 apiece. With 1.4 million shares sold in three days, that's a loss of over $5 million. Pocket change for Gates, certainly, but in almost halving his original 20 percent stake it's a strong vote of no confidence in the ethanol business. While Accel Partners Joe Schoendorf has said that "a good way to lose money is to bet against Vinod [Khosla]" who's been bullish on ethanol, I'm going to side with Gates on this one.