Google Inc (GOOG), Cliffs Natural and LVS Are Among Billionaire Ray Dalio’s New Stock Picks

 BRIDGEWATER ASSOCIATESGoogle Inc (NASDAQ:GOOG), Cliffs Natural Resources Inc (NYSE:CLF), and Las Vegas Sands Corp (NYSE:LVS) are among billionaire Ray Dalio’s new stock picks during the second quarter. Bridgewater Associates, one of the world’s largest hedge funds yet still able to return 23% last year, primarily focuses on more macro-oriented investments but invests in individual equities as well. Many of these positions are disclosed on the fund’s 13F filing about six weeks after the end of each quarter (see what stocks Bridgewater Associates likes). According to the fund’s filing for the second quarter, here are some of the largest new stock positions that Ray Dalio and his team initiated between April and June 2012:

The fund bought about 250,000 shares of Cliffs Natural Resources (NYSE:CLF), a mining company that has been hit hard by low demand for iron ore and metallurgical coal: its stock is down 54% since a year ago. By this point, however, the company only needs to stop the bleeding in order to prove a good value investment. It trades at 4 times trailing earnings, and Wall Street analysts’ projections imply a forward P/E of 5. The company also increased its dividend recently and now offers a high dividend yield going forward unless continued sluggishness in the business forces them to cut it back. Apparently Bridgewater is confident that the industry will not continue to deteriorate, and that Cliffs is thus a good value. Carlson Capital owned a small number of shares in the company at the end of March and increased its stake to 1 million shares over the course of the quarter.

Bridgewater also initiated a position in Las Vegas Sands (NYSE:LVS), buying about 270,000 shares. Las Vegas Sands owns several casinos across Las Vegas, Macau, and Singapore. It too has struggled recently: earnings dropped 41% last quarter compared to the same period in 2011 and the stock is down 11% from a year ago against a rising market. By buying in Bridgewater is signaling some degree of confidence in U.S. and Chinese macro. In this they are in agreement with the sell-side, whose earnings estimates turn a trailing P/E of 25 into a forward multiple of 16 and a five-year PEG ratio of 0.9. Fellow billionaire Ken Fisher’s Fisher Management was another buyer of the stock during the second quarter.

The third largest new company stake in Bridgewater’s portfolio according to the filing was about 210,000 shares of Honeywell. The diversified industrial company produces aerospace components, environmental controls, and performance materials. Honeywell’s stock price is up this year, but has underperformed the market despite good numbers in its last quarter (revenue rose 4% and earnings increased 11% compared to the same quarter the previous year). This, like Las Vegas Sands, is another company where Bridgewater and Wall Street analysts are on the same page: not a good value today (trailing P/E of 20) but with strong growth ahead of it (forward P/E of 12, five-year PEG of 1).

Technology giant Google Inc (NASDAQ:GOOG) was another new stock pick for Bridgewater. The fund only bought about 20,000 shares for a position worth over $11 million. Google trades at 20 times trailing earnings but only 14 times forward earnings estimates, as analysts expect it to continue its strong growth. Earnings were up 11% last quarter compared to a year ago despite Google’s size, and it has further growth prospects in tablets and smartphones. The stock was trading down this year until recently, and is still about flat for the year compared to a rising NASDAQ. Google Inc (NASDAQ:GOOG) also ranked in our ten most popular stocks among hedge funds for the second quarter.

Bridgewater’s new stock positions, with the exception of Cliffs Natural Resources (NYSE:CLF), seem to be based on thinking that optimistic sell-side earnings estimates are right and the wary market is wrong. Cliffs, in turn, is the fund trying to catch a falling knife: the iron ore and metallurgical coal industries are down but probably not going to get much worse, and as long as they don’t the stock is a buy based on its valuation.

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

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

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!