Billionaire Ray Dalio’s Latest Stock Picks

BRIDGEWATER ASSOCIATESRay Dalio’s Bridgewater Associates is an extremely large, and extremely successful, hedge fund. Based in Westport and known for its extremely strong- some would say cultish- culture, it has grown to well over $100 billion in assets under management with little negative impact on its returns. Dalio himself has become a billionaire several times over due to the fund’s performance. We have gone through the fund’s recent 13F filing, which reports some of its equity positions from the end of September, and compared it to previous filings (see what Bridgewater has reported owning in the past) to get an idea of what Dalio and his team are thinking. Here are some themes that we’ve noticed in the fund’s portfolio:

Hardware. Hewlett-Packard Company (NYSE:HPQ) and Dell Inc. (NASDAQ:DELL) were among Bridgewater’s top five stock picks at the end of June, and even with both stocks down during the third quarter- HP by 14% and Dell by over 20%- they remained at the top of the hedge fund’s portfolio as the stake in HP was increased by over 10% and the stake in Dell grew by over 60%. These companies are both trying to move away from PCs into more services-oriented businesses, but the market has been dissatisfied with their progress. It looks to us like Bridgewater believes that HP’s and Dell’s hardware businesses won’t do as poorly in the future as the market expects. It’s possible that the fund is in fact more confident that these players will make a successful transition to software and services, but we’d note that while Bridgewater did also report a sizable position in Oracle it had sold shares in that company during the third quarter. A hardware play seems to be more likely. We’d looked at Dell and Hewlett Packard recently and hadn’t considered either to be a good stock to buy despite forward P/Es in the 4-5 range.

Retail. This one we may be stretching a bit, but Bridgewater did add shares to its position in Staples- vaulting that to the #6 slot in its 13F portfolio- as well as increasing its holdings of Safeway Inc. (NYSE:SWY) by about a third to make that the second largest stock holding by market value in its 13F portfolio. The trailing, and forward, P/E multiples at these two companies all come out to 8x, which normally represents value territory. Both stocks also pay dividend yields of about 4%. Staples seems to be struggling more in terms of its business, as competition with Amazon likely helped drive its earnings down 32% in its second fiscal quarter versus a year earlier, but it’s Safeway- where net income has actually been up- that is the more popular short selling target with 30% of the outstanding shares held short. Safeway looks like a good potential value play, and while we’re considerably more cautious on Staples we could see an investor looking at that as well.

Uncool tech companies. Apple and Google are favorites of hedge funds (they’d topped our list of the most popular stocks among hedge funds for the second quarter), tech watchers, and consumers, but neither of those companies were to be found in Bridgewater’s 13F at all, let alone in its top holdings. It did own Microsoft Corporation (NASDAQ:MSFT) (the fund’s largest equity position by market value; to be fair, it too had been a widely held stock by hedge funds) and Yahoo! Inc. (NASDAQ:YHOO) (a position that it significantly increased to 1.3 million shares). Microsoft and Yahoo carry forward P/Es of 8 and 16 respectively, with Microsoft’s multiple being artificially low due to the release of new versions of Windows and Office. As such we can’t really say that that they are cheap, especially compared to Apple.

Bridgewater, at least in terms of its 13F portfolio, seems to be quite contrarian here. That’s paid off in some ways- it’s missed the recent correction at Apple and Google- but not so much in others (as HP and Dell have continued to drop so far this quarter). Potentially the most interesting ideas for investors are its larger positions in Safeway and Staples.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

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!