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

Eaton Corp PLC (NYSE:ETN), the power management company, saw lackluster results last quarter due to weakness in the U.S. and Asian markets. The industrial company’s 3Q results came in at $1.07, just below $1.08 from one year earlier. The diversified power management company has six segments, but its geographical concentration will likely continue to cause weakness in the interim. One of its key segments – Hydraulics – is especially feeling the pressure from the Chinese slowdown. The company’s high-profile acquisition of Cooper Industries for nearly $12 billion also looks to further drive its 50.0 debt-to-equity ratio even higher. In our opinion, some of the industry giants such as Honeywell and ABB Ltd, have better wherewithal to navigate continued industry weakness.

Intel Corporation (NASDAQ:INTC) is another big dividend paying stock – a 4.3% yield – which hedge funds are quickly falling out of love with. Intel is down almost 15% year to date given an uncertain future for PC demand. The onslaught of market share infringement by smartphones and tablets has caused recent downward revisions for next year’s EPS; consensus is now 15% lower than it was three months ago. This large-cap tech giant might be another value trap – much like Best Buy – where it trades at 9x forward earnings and boasts a 0.8 PEG. We cautious the use of these metrics might be compromised due to Intel’s lowered expectations next quarter, and continued weakness in developed markets. Intel also saw billionaire Steven Cohen and SAC Capital sell off a massive portion of their shares last quarter (check out Steven Cohen’s other moves).

To recap: we believe that Ray Dalio has seen fundamental consumer preference shifts tear away the product demand for a couple companies he owned, causing him to adjust accordingly. The 3Q selloff of Best Buy comes as shoppers move to an online purchase preference, and the Intel selloff comes as customers shift from PCs to tablets and smartphones. Acquisitions by Symantec and Eaton might have been mistimed and mispriced, where Symantec purchased Verisign’s security software business, but industry demand is moving toward hardware purchases and away from software. Eaton’s rich purchase might overload the company with debt, and Applied is simply facing pressure from an ever-changing tech market that cannot seem to generate any sustainable demand for solar panels. To continue reading about Ray Dalio in the news, check this out, or visit his profile page on Insider Monkey.