In this article we present the list of Billionaire Bridgewater Founder Ray Dalio’s Top 10 Holdings in 2023.
McDonald’s Corporation (NYSE:MCD), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG) are three of the top holdings in billionaire money manager Ray Dalio’s consumer-focused 13F portfolio.
Ray Dalio’s Bridgewater Associates has been the most successful fund in history in terms of net dollar gains since inception, delivering $52.2 billion in gains through the end of 2021 according to research conducted by LCH Investments. The fund continued to roll last year even in the midst of Dalio stepping down in October, as the Pure Alpha strategy returned 9.5%.
Bridgewater has undertaken several initiatives under new chief executive Nir Bar Dea, including slashing 8% of its workforce and capping investments in its flagship fund as it looks to reallocate resources and restructure. Among other things, Bar Dea plans to invest heavily in Bridgewater’s AI and machine learning capabilities.
Meanwhile, Dalio continues to expand his family office, which manages the billionaire’s greater than $16 billion in personal wealth, as well as his philanthropic donations. The Dalio Family Office’s newest branch is planned for Abu Dhabi, where it will work alongside the firm’s existing branches in Singapore and the United States.
Dalio gave the recently agreed-upon debt-ceiling deal a D grade in a tweet on Twitter, adding that it was about the best that could be expected but simply wasn’t good enough. In a LinkedIn post published in May, Dalio warned that the U.S. faces a disastrous financial collapse if it continues to raise the debt ceiling without any meaningful limit being put in place.
Dalio also engaged in a recent conversation of sorts with the AI chat platform ChatGPT as he relayed in a YouTube video posted in the middle of April. ChatGPT wondered what the most important investing-related lesson is that Dalio learned throughout his storied career, to which the Bridgewater founder responded that diversification was the “Holy Grail” of investing. Dalio added that by investing in 10 to 15 good, uncorrelated assets, an investor can reduce their risk by about 80% without impacting their potential returns.
In the first quarter, Bridgewater Associates made significant adjustments to its 13F portfolio, selling off 228 of its former holdings while adding just 118 new positions in their place. The firm also trimmed the size of far more holdings than it was adding to. Of particular note was Bridgewater’s exposure to the finance sector, which was lowered by 330 basis points to 23%. In response, Bridgewater’s exposure to healthcare and communications stocks was raised by a combined 371 basis points. Bridgewater’s 13F portfolio dropped to $16.4 billion in assets as of the end of March, down from $18.3 billion at the end of 2022.
Amid a turbulent quarter, the first full one in which Nir Bar Dea was at the helm of Dalio’s iconic firm, let’s take a look at the top ten holdings of the fund in 2023.
Ray Dalio of Bridgewater Associates
Our Methodology
The following data is gathered from Bridgewater Associates’ latest 13F filing with the SEC. We follow hedge funds like Bridgewater Associates because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2023 reporting period.
Billionaire Bridgewater Founder Ray Dalio’s Top 10 Holdings in 2023
10. Visa Inc. (NYSE:V)
Value of Bridgewater Associates’ 13F Position: $223 million
Number of Hedge Fund Shareholders: 174
The Procter & Gamble Company, McDonald’s Corporation, and PepsiCo, Inc. are a few of the longtime favorite top holdings of Bridgewater founder and CIO Ray Dalio. A newer addition to a top 10 spot among his holdings is Visa Inc. (NYSE:V), after Dalio grew his stake in the company by nearly 150% during Q3 of 2022. In the first quarter of this year he boosted the size of his V stake by another 19%, ending Q1 with 990,819 shares.
Visa Inc. has broadly outperformed the S&P 500 over the last decade and could very well do so in the decade to come. The credit card payments processor is still growing revenue at a low-double digit rate and has several tailwinds at its back that could allow it to continue doing for the foreseeable future. Chief among those tailwinds are the continued rise in the global penetration of credit cards and ecommerce’s growing share of global sales. And both of those tailwinds have plenty of room to run yet. As such, Visa shares are currently trading at somewhat of a premium at 29.5x earnings.
Polen Global Growth Strategy shared some of the fundamental strengths that Visa Inc. enjoys in its Q1 2023 investor letter:
“We trimmed Mastercard and Visa Inc. to equal weights of the Portfolio. Mastercard and Visa operate as a duopoly in a large and growing market. Over the last 50 years, global personal consumer expenditures (PCE) has grown 7-9% annualized. We expect 4-5% long-term PCE growth going forward. Additionally, the shift from cash to credit continues unabated, with a total credit penetration of only approximately 50% globally.3 This shift provides Visa and Mastercard with another ~4-6% of growth. When combined with PCE, this gives both companies high-single-digit to low-double[1]digit revenue growth opportunities. This growth estimate is before accounting for growth amplifiers like the acceleration of e[1]commerce, the shift from offline to online, and additional services. Both companies enjoy extremely strong network effects that provide strong competitive advantages.
We have trimmed Visa and Mastercard because their combined weight grew to over 12% of the Global Growth Portfolio because of their recent performance and to fund our increase in Amazon’s position size. We added to both positions when their prices were depressed due to cross-border transactions deteriorating materially from the pandemic. Cross-border volumes came roaring back when travel corridors reopened, and although we are several quarters removed from the cross-border nadir, Visa still grew volumes >30% in 1Q23. Total cross-border volumes are now 132% of 2019 levels. At 4.5% each, both companies remain high conviction positions for Global Growth.”
9. Alphabet Inc. (NASDAQ:GOOG)
Value of Bridgewater Associates’ 13F Position: $239 million
Number of Hedge Fund Shareholders: 204 (GOOG), 155 (GOOGL)
Bridgewater CIO Ray Dalio was bullish on Alphabet Inc. (NASDAQ:GOOG) during Q1 after shares hit a two-year low at the end of 2022. Dalio more than tripled the size of his stake in Alphabet’s class A (GOOGL) shares during the quarter, holding just under 2.31 million of them at the end of March. GOOGL shares are having a much better 2023 so far, gaining 37%.
As Baron Opportunity Fund discusses below, one of the biggest worries investors have about Alphabet Inc. right now is how its search engine traffic will hold up against the rise of ChatGPT, which has already had 1.6 billion visitors. When users want general information on certain topics, they may be increasingly likely to seek out quick answers from the AI platform rather than wade through pages of search results (and ads), which frequently contain links to outdated or even irrelevant content. While Google plans to eventually release its own competing AI platform, if anything that will just further cannibalize its own search engine and eat into its ad revenue.
Baron Opportunity Fund continues to lower its exposure to Alphabet Inc. given some of those worries, as it revealed in its Q1 2023 investor letter:
“As we did last quarter, we continued to decrease our weighting in Alphabet Inc. because, as stated earlier, we believe ChatGPT and/or similar AI-based services present a hard-to-measure risk to Google’s virtual search monopoly.”
8. Starbucks Corporation (NASDAQ:SBUX)
Value of Bridgewater Associates’ 13F Position: $259 million
Number of Hedge Fund Shareholders: 69
There’s been a 23% rise in hedge fund ownership of Starbucks Corporation (NASDAQ:SBUX) over the past two quarters, with the stock sitting near its all-time high in smart money shareholders. Bridgewater Associates pared back its SBUX holding by 5% during the first quarter to 2.49 million shares.
Starbucks Corporation continues to expand its global footprint, with plans to grow its store count to 45,000 within the next two years, which would double its store count since 2015. Starbucks plans to open about one-third of those new stores in China, where it’s understandably been facing headwinds of late, but the long-term opportunity there is tremendous. SBUX shares have dipped by 13% since the company’s latest earnings report in early May, driving their price down to 32.2x earnings, which looks reasonable.
The Polen Global Growth Strategy isn’t as bullish on Starbucks Corporation as Bridgewater’s Ray Dalio, as it sold off its stake in the company in Q4 according to its Q4 2022 investor letter:
“We also liquidated our remaining position in Starbucks Corporation. While the company remains a unique and resilient franchise, China is a very important growth market for the company, and zero-COVID policies have made it challenging for the company to operate in this important market. While we expect China to return to more “normal” operation at some point, any COVID flare-ups, in China or other markets, present a very real headwind to Starbucks’ profitability. L’Oreal, Estée Lauder, and other holdings continue to have meaningful exposure to China, but in each of these cases, our research indicates they’re able to better adapt to these operating challenges and realize the growth opportunity in China through their online businesses. In short, we think there are better risk-reward opportunities.”
7. Walmart Inc. (NYSE:WMT)
Value of Bridgewater Associates’ 13F Position: $394 million
Number of Hedge Fund Shareholders: 92
There was a massive spike in hedge fund ownership of Walmart Inc. (NYSE:WMT) during Q1, as 37% more funds were long WMT at the end of Q1 than at the start of it. Louis Bacon’s Moore Global Investments and George Soros’ Soros Fund Management were among the funds adding Walmart to their 13F portfolios. On the other hand, Bridgewater’s Ray Dalio offloaded 22% of his Walmart shares during the quarter, ending March with 2.67 million of them.
Walmart Inc. grew e-commerce sales by 26% during the first quarter of its fiscal year 2024, while overall sales rose by 7.7% year-over-year on a constant currency basis. Operating cash flow also rebounded to $4.6 billion in the quarter from a loss of $3.8 billion a year earlier.
After buying back about $10 billion worth of its shares in FY 2023, Walmart Inc. scaled back to just $700 million in repurchases in the latest quarter. The company still has $18.6 billion remaining on its share repurchase authorization, which would buy back close to 5% of its outstanding shares.
6. Costco Wholesale Corporation (NASDAQ:COST)
Value of Bridgewater Associates’ 13F Position: $428 million
Number of Hedge Fund Shareholders: 63
Closing out the first half of Bridgewater founder Ray Dalio’s top holdings in 2023 is Costco Wholesale Corporation (NASDAQ:COST), ranking sixth. The billionaire money manager trimmed his stake in the wholesale retailer by 9% during Q1, ending the quarter with 861,306 shares. He owned the largest COST position among the select group of hedge funds tracked by Insider Monkey’s database.
Hedge funds and analysts love Costco Wholesale Corporation for its staunchly loyal customer base and its strong value proposition. Truist has a $568 price target on the stock and believes the tougher economic conditions will allow Costco to further grow its membership and gain market share. Deutsche Bank has a $574 target on COST shares.
Costco Wholesale Corporation has been experiencing some weakness in its discretionary categories, which led to soft March sales and negative comps for the first time in nearly seven years, excluding the pandemic. It’s likely that weakness was felt broadly across retail however and wasn’t Costco specific. Overall March sales grew by 0.5% to $21.7 billion.
PepsiCo, Inc., The Procter & Gamble Company, and McDonald’s Corporation are three of Bridgewater founder Ray Dalio’s top 2023 holdings. Find out why by clicking the link below.
5. McDonald’s Corporation (NYSE:MCD)
Value of Bridgewater Associates’ 13F Position: $430 million
Number of Hedge Fund Shareholders: 65
After hitting a four-year low in hedge fund support during the second quarter of 2022, McDonald’s Corporation has since seen an increase in hedge fund ownership over each of the past three quarters. Dalio’s Bridgewater trimmed its stake in the fast-food giant by 3% during Q1 to 1.54 million shares.
McDonald’s Corporation is a great defensive stock, which is certainly one of the reasons Ray Dalio likes it. Despite, or more likely because of, the weakening economic conditions, McDonald’s comparable sales surged by 13% in Q1, while it made market share gains in all of its major markets. While margins were softer during Q1, McDonald’s also has significant margin upset longer-term as it embraces automation and new store formats that emphasize speed and efficiency.
McDonald’s Corporation plans to open a net total of 1,500 restaurants in 2023, the bulk of which are planned for its International Development Licensed Markets regions, which includes, Asia, the Middle East, Latin America, and parts of Europe.
4. The Coca-Cola Company (NYSE:KO)
Value of Bridgewater Associates’ 13F Position: $505 million
Number of Hedge Fund Shareholders: 62
Dalio trimmed his stake in The Coca-Cola Company (NYSE:KO) by 4% during Q1, ending the quarter with 8.15 million shares. After four straight quarters of declining hedge fund ownership, there was a rebound in Q1, with the number of smart money managers long KO rising slightly. The stock also remains a favorite of another billionaire, defensively-focused investor, Warren Buffett.
As with most of Dalio’s top holdings, The Coca-Cola Company is a world-class dividend stock, having increased the size of its payouts for 61 years running. Coke’s dividend yields 2.9% and the company’s payout ratio is right around its ten-year average of about 60%.
Evercore ISI was bullish on Coke’s Q1 results and sees the company as being favorably set up for the next one to two years as the dollar weakens and commodity inflation eases.
Carillon Tower noted The Coca-Cola Company’s strong pricing power in its Q3 2022 investor letter:
“Shares of The Coca-Cola Company sold off with consumer staples even as the company reported strong pricing for the second quarter. On average, product prices rose with management hinting at further momentum.”
3. PepsiCo, Inc. (NASDAQ:PEP)
Value of Bridgewater Associates’ 13F Position: $512 million
Number of Hedge Fund Shareholders: 72
Bridgewater sold off 8% of its PepsiCo, Inc. holding in Q1, leaving it with 2.81 million shares on March 31. Hedge fund ownership of the beverage and snacks giant is hovering near ten-year highs and is beginning to open up a gap on rival Coke, which it has traditionally been slightly more popular than in terms of smart money sentiment.
PepsiCo, Inc. is another dividend king beverage giant that Dalio loves, and one which is growing sales at a double-digit rate to easily outpace its rival. Pepsi flexed its own pricing power during the latest quarter, as prices were up 16% year-over-year while organic volume dipped by just 2% in response. Pepsi’s dividend yield is lower than Coke’s and its payout ratio is higher, so it’s not quite as attractive from a dividend perspective, but there’s otherwise a lot to like about the company’s momentum right now.
The Madison Sustainable Equity Fund discussed PepsiCo, Inc.’s efforts to reduce water usage in its Q1 2023 investor letter:
“PepsiCo, Inc. announced that it will commit $3.3 million in funds toward water replenishment projects across North America. These projects aim to reduce absolute water use and replenish back into the local watershed more than 100% of the water used at company-owned and third-part sites in high water-risk areas.”
2. Johnson & Johnson (NYSE:JNJ)
Value of Bridgewater Associates’ 13F Position: $556 million
Number of Hedge Fund Shareholders: 86
Johnson & Johnson remained Ray Dalio’s second-largest holding for the fourth-straight quarter in Q1. Bridgewater upped its stake in JNJ by 1% during the quarter, ending March 31 with 3.59 million shares. Hedge fund ownership of the stock has remained largely flat over the past two-and-a-half years.
Johnson & Johnson is yet another dividend king and stalwart defensive stock that finds itself in a premium position in Ray Dalio’s 13F portfolio. The healthcare products and pharmaceuticals company has only modest growth rates at this point (5.6% in Q1), but they are at least steady and predictable, and the company is resilient in the face of economic downturns due to the necessity of many of its products.
Distillate Capital was somewhat worried about Johnson & Johnson’s valuation last year, as related in its Q2 2022 investor letter:
“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”
1. The Procter & Gamble Company (NYSE:PG)
Value of Bridgewater Associates’ 13F Position: $735 million
Number of Hedge Fund Shareholders: 76
The Procter & Gamble Company is Ray Dalio’s top holding so far in 2023, just as it was throughout all of 2022. Bridgewater also remained the company’s biggest shareholder for the fourth-straight quarter. Dalio’s firm trimmed its stake in PG slightly during Q1, selling off 2% of its shares to leave Bridgewater with 4.94 million.
The Procter & Gamble Company has executed an impressive restructuring in recent years, cutting billions of dollars in overhead and trimming its product portfolio. Proctor & Gamble’s sales have proven resilient in the face of price increases, which were driven 10% higher in the company’s fiscal Q3, while volumes dropped by just 3%. That has helped further boost the company’s margins and drive earnings growth, which is expected to persist into the company’s 2024 fiscal year. PG shares have nearly doubled over the last five years however and may be too fairly valued to justify buying into now.
Rowan Street Capital worries how The Procter & Gamble Company investors will fare once the market loses its appetite for safe stocks, as it outlined in its Q4 2022 investor letter:
“Let’s look at The Procter & Gamble Company. Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, lets say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”
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This article is originally published at Insider Monkey.
