Billionaire Ray Dalio, who calls himself “a professional mistake maker,” runs the world’s biggest hedge fund firm, Bridgewater Associates. The Connecticut-based asset manager was founded in 1975 out of a two-bedroom apartment and currently manages approximately $150 billion in global investments for various institutional clients, including foreign governments and central banks, corporate and public pension funds, university endowments, and charitable foundations.
Bridgewater Associates represents the biggest hedge fund vehicle on the planet and also runs the two largest individual hedge funds in the world, Pure Alpha and All Weather. The asset manager’s flagship Pure Alpha fund, which makes broad bets on global economic trends, was down by 12% in the first half of 2016 – the fund’s worst first-half performance in more than 20 years. Meanwhile, the hedge fund’s All Weather fund, which is said to “perform well across all environments,” returned an impressive 10% in the first half of the year. Ray Dalio was the third-highest earning hedge fund manager in 2015, as he took home $1.4 billion, so retail investors should definitely look at his firm’s quarterly moves for inspiration. Hence, the following article will lay out several noteworthy plays made by Bridgewater Associates during the second quarter of 2016.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).
#5. Silver Wheaton Corp. (USA) (NYSE:SLW)
– Shares Owned by Bridgewater Associates (as of June 30): 845,201
– Value of Bridgewater Associates’ Holding (as of June 30): $19.89 Million
Bridgewater Associates boosted its position in Silver Wheaton Corp. (USA) (NYSE:SLW) by 79% during the second quarter of 2016, to 845,201 shares. The increased position was valued at $19.89 million at the end of June. The shares of the largest pure precious metal streaming company in the world have gained 142% since the beginning of 2016. Silver Wheaton’s second quarter revenue was $212 million, on sales volume of 7.1 million ounces of silver and 79,800 ounces of gold. The company’s top-line grew by 29% year-over-year, reflecting a 28% increase in the number of silver ounces sold, a 16% increase in the number of gold ounces sold, as well as higher realized prices for both metals. Earlier this month, Silver Wheaton agreed to acquire the rights to an additional 25% of the Salobo mine’s gold production from Rio de Janeiro-based Vale SA (ADR) (NYSE:VALE) for an upfront payment of $800 million, expanding a 2013 streaming deal that already included 50% of the mine’s gold output. David Iben’s Kopernik Global Investors reported owing 1.61 million shares of Silver Wheaton Corp. (USA) (NYSE:SLW) in its 13F filing for the second quarter.
#4. Agnico Eagle Mines Ltd (USA) (NYSE:AEM)
– Shares Owned by Bridgewater Associates (as of June 30): 459,027
– Value of Bridgewater Associates’ Holding (as of June 30): $24.56 Million
The world’s biggest hedge fund firm added 204,100 shares of Agnico Eagle Mines Ltd (USA) (NYSE:AEM) to its holding during the April-to-June period, finishing the second quarter with 459,027 shares valued at $24.56 million. The Canadian gold mining company has mines located in Canada, Mexico and Finland, but also has exploration and development activities in each of those countries, as well as in the U.S. and Sweden. The Toronto-based company has the highest gross margin among major producers and also represents the only major gold miner to expand its margin over the past five years. As gold prices gained ground due to global economic-growth concerns and expectations that the Federal Reserve will increase interest rates at a slower-than-previously-anticipated pace, the shares of Agnico Eagle Mines have jumped by 124% in 2016. Royce & Associates, founded by Chuck Royce, owns 84,000 shares of Agnico Eagle Mines Ltd (USA) (NYSE:AEM) as of June 30.
The second page of this article will reveal three other major moves completed by Bridgewater Associates during the June quarter.