Billionaire Ray Dalio Dumped Best Buy Co., Inc. (BBY) and Intel Corporation (INTC) Last Quarter

Page 1 of 2

BRIDGEWATER ASSOCIATESRay Dalio founded Bridgewater Associates out of his apartment in 1973 and after 28 years, he gave up the title of CEO last year. Dalio is now “mentor” and continues to serve as co-CIO. Bridgewater manages institutional money only, around $120 billion, with the true uniqueness of the firm being its culture – driven by utter transparency. We have researched Bridgewater’s recent 13F filing – which reports publicly traded equity positions from the end of September – and noticed five stocks that Dalio and his firm sold its complete stake in. The reasons behind these selloffs range from industry-related to company-specific (check out Ray Dalio’s other key moves).

Best Buy Co., Inc. (NYSE:BBY) was Bridgewater’s 11th largest 13F holding at the end of 2Q following a 350% increase over that period. Dalio quickly fell out of love with the big box retailer and dumped all of its shares last quarter. Best Buy was down 15% during 3Q, and continues to see earnings pressure from online retailers amid a less-than-stellar economic backdrop. With a forward P/E of just over 5x, we are cautious that investors could fall into a value trap. Best Buy also has an attractive dividend, yielding 5.6%, but the retailer has seen its cash position drained by 85% over the past year, and free cash flow generation is slowing.

From a broader perspective, consumer electronics purchases are seeing a fundamental shift that is moving to the online landscape. This shift has already pushed one retailer completely out of business – Circuit City – and has many investors not too optimistic on what the future will bring. Founder Richard Schulze’s interest in the company appears to have little bearing on reassuring investors that there is sustainable value in Best Buy’s business model (see Are Hedge Funds Hoping For a Best Buy Takeover?)

The retailer saw Schulze show potential interest in exploring a buyout between $24-$26 a share, which held up the stock for a short time. After weak 3Q results, shares fell as low as $12, and Schulze lowered his potential offer price to $20. Billionaire David Einhorn – founder of Greenlight Capital – was another top fund manager selling off his entire stake in Best Buy last quarter (check out David Einhorn’s newest stock picks).

Symantec Corporation (NASDAQ:SYMC) was another one of Dalio’s selloffs in 3Q. Symantec is a software security company with projected FY2013 revenue growth of only 1%. Its long-term growth also remains near the low end of the industry at an 8% compounded annual growth rate, far below notable competitor CommValut Systems (23%). While Symantec appears cheap at 11x earnings, its growth outlook places it at the bottom of the industry and justifies its subpar metrics. Symantec is also heavily reliant on large-sized contracts, which are becoming harder to find in an increasingly tight fiscal environment.

Applied Materials, Inc. (NASDAQ:AMAT) is the world’s largest manufacturer of water fabrication equipment for the semiconductor industry. Dalio found little reason to stay invested in the company and sold off all his shares on the back of expectations that Applied would see FY2013 sales down 10%, following a 17% decline in 2012. Applied posted 3Q earnings results of $0.06, down from $0.21 year over year. This drop comes on a sharp decline in chip equipment revenues, and weakness in many of Applied’s other segments as well. We believe there are better investments in the semiconductor industry, mainly due to a continued expected decline in flat panel displays, and uncertainty in the solar industry. Applied’s long-term EPS growth rate (9%) is well below other investment opportunities in the space - the industry’s average is 15%.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Most Expensive Rum Brands in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!