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Ray Dalio and Bridgewater Associates’ Top 30 Stock Picks

Bridgewater Associates’ Ray Dalio is our kind of guy. He’s a truth seeking guy who believes in transparency.

BRIDGEWATER ASSOCIATES

“I believe that truth is healthy and that most people can get what they want if they understand what is true and learn how to successfully deal with it. But I recognize that some people have problems applying this to their and others’ mistakes and weaknesses. That is because there commonly exists a stupid paradigm that “successful” people don’t make mistakes and don’t have weaknesses, whereas the truth is that everyone makes mistakes and has weaknesses. I believe that most important difference between “successful” people and “unsuccessful” people is that the successful people recognize their mistakes so that they learn from them and they recognize their weaknesses so they develop strategies to get around them,” says Dalio.

Ray Dalio’s Bridgewater Associates manages $86 Billion in hedge funds and other vehicles. Dalio’s Pure Alpha was among the most successful hedge funds in 2010, returning 38%. Pure Alpha gained 8.7% in 2009, 14% in 2008 and 18% over the last 10 years. There weren’t many hedge funds that had positive returns in 2008, so it’s very likely that Bridgewater’s Pure Alpha strategy may really be “pure alpha”. Most long/short equity hedge funds have 30-80% beta exposure, which is why they lost so much money in 2008.

Bridgewater had 402 positions in its latest 13F filing, with a total value of nearly $6 Billion. Here are Ray Dalio‘s top 30 stock holdings (excluding ETFs):

Company Ticker Return Value (Millions)
Microsoft Corp MSFT -2.4% 54
GENERAL ELECTRIC CO GE 16.6% 31
ORACLE CORP ORCL 7.1% 28
AMERICAN EXPRESS CO AXP 9.4% 25
NOVELLUS SYSTEMS INC NVLS 23.5% 25
APPLIED MATERIALS INC AMAT 14.0% 24
NEWMONT MINING CORP NEM -7.4% 23
ITT EDUCATIONAL SERVICES INC ESI 7.3% 21
CEPHALON INC CEPH -5.1% 20
Pulte Group Inc PHM 1.7% 18
TRW Automotive Holdings Corp TRW 15.8% 18
CAPITAL ONE FINANCIAL CORP COF 22.4% 18
Health Management Associates Inc HMA -0.5% 17
Macy’s Inc M -2.7% 17
Lexmark International Inc LXK 15.5% 17
Tyson Foods Inc TSN 7.4% 17
VISHAY INTERTECHNOLOGY INC VSH 21.5% 17
H&R BLOCK INC HRB 11.3% 17
PEPSICO INC PEP -2.2% 16
Abercrombie & Fitch Co ANF -4.8% 16
L-3 Communications Holdings Inc LLL 13.5% 16
TEMPLE-INLAND INC TIN 15.6% 15
CAPITALSOURCE INC CSE 15.1% 15
PARKER HANNIFIN CORP PH 8.8% 15
DELL INC DELL 3.1% 15
Illinois Tool Works Inc ITW 4.5% 15
Guess ? Inc GES -3.2% 15
Kohl’s Corp KSS -2.9% 15
COMPUTER SCIENCES CORP CSC -3.4% 15
ADOBE SYSTEMS INC ADBE 9.4% 15

These thirty stocks returned 6.8% since the end of 2010, beating the SPY by 0.9 percentage points.

The largest position in Bridgewater’s 13F portfolio was Microsoft. Richard Perry’s Perry Capital, Leon Cooperman’s Omega Advisors, Barry Rosenstein’s Jana Partners, Curtis Schenker’s Scoggin Capital, David Einhorn’s Greenlight CapitalBrevan Howard, and Whitney Tilson’s T2 Partners are other hedge funds with Microsoft investments.

Bridgewater’s third largest stock holding, Oracle, is also held by Thomas Steyer’s Farallon Capital and Lee Ainslie’s Maverick Capital.

Andreas Halvorsen’s Viking Global just added CapitalOne Financial (COF) in its portfolio.

Seth Klarman’s Baupost has CapitalSource Inc (CSE) in its portfolio but started to reduce it by 21% during fourth quarter.

Whitney Tilson is also shorting Dalio’s ITT Educational Services (ESI).

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