Billionaire Ray Dalio’s Bridgewater Associates is one of the largest hedge funds in the world, with assets under management of over $100 billion. The fund recently filed its 13F with the SEC, disclosing many of its long equity positions as of the end of March. We have found that 13Fs can be useful to investors, even with the included information being a little old: the most popular small cap stocks among hedge funds, we have found, earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). Of course, it’s also potentially useful to see what top managers are thinking in general. We have gone through the filing and compared it to previous reports from Bridgewater (see Dalio’s stock picks over time) and here are three big moves that the fund made in its portfolio during the first quarter of 2013:
Tech giants. The three largest single-stock holdings in Dalio’s portfolio at the end of March were Microsoft Corporation (NASDAQ:MSFT), Oracle Corporation (NASDAQ:ORCL), and Intel Corporation (NASDAQ:INTC) – tech companies with market caps of over $100 billion in each case. These businesses have had a range of reactions to the decline of the PC. Intel Corporation (NASDAQ:INTC) is currently in the worst shape, with net income falling 25% last quarter compared to the first quarter of 2012, though we can’t imagine the continuation of this trend being good for Microsoft Corporation (NASDAQ:MSFT) either (currently that company’s revenue and earnings are up, but it’s possible that that is due to the release of Windows 8 giving a temporary boost to the business). All three companies’ forward earnings multiples are in the 11-12 range. In Oracle Corporation (NASDAQ:ORCL)’s case this does represent a significant increase in earnings per share, even though the enterprise software company’s numbers have been about flat. Microsoft and Oracle Corporation (NASDAQ:ORCL) had made our list of the most popular tech stocks among hedge funds for the fourth quarter of 2012 (find more tech stocks hedge funds loved).
Dumping Apollo. At the beginning of this year, Bridgewater owned 1.8 million shares of Apollo Group Inc (NASDAQ:APOL) but the fund closed its position in the for-profit education company between January and March. Apollo Group Inc (NASDAQ:APOL)’s stock price is down 41% in the last year as society’s skepticism about the benefits of for-profit education increase- which may not only hurt business directly, but may also lead to changes in the student lending programs which currently serve as a major source of funding for the industry. Earnings were down almost 80% in the most recent quarter (which ended in February) compared to the same period in the previous fiscal year. Wall Street analysts are somewhat optimistic, and as a result the forward P/E is 9, but many investors actually find Apollo overvalued with 21% of the float held short.