Most of billionaire Ray Dalio and Bridgewater Associates’ capital is invested in macro instruments such as currencies and commodity futures, but a portion of the fund invests in equities in order to pursue its investment strategies. Here’s its latest stock plays:
Micron is the new top dog. Micron Technology (NASDAQ:MU) was a new position for Dalio and Bridgewater in the second quarter, where it represented the 17th largest holding in their equity portfolio. In the third quarter, Dalio upped his bet on the NAND Flash and DRAM memory company considerably, by nearly 800,000 shares. The updated stake in Micron is now 60% larger than it was when he first established it, and at $34.9 million, it’s the largest non-ETF holding he has.
Blue chip tech stocks are getting love as well. In addition to Micron, Dalio was also very bullish on blue chip tech stocks. He increased his exposure to IBM (NYSE:IBM) and Intel (NASDAQ:INTC), and established a new position in Hewlett-Packard (NYSE:HPQ). IBM is now the third largest non-ETF holding in Dalio’s equity portfolio, followed by Hewlett-Packard and Intel, which are sixth and seventh, respectively. The hedge fund billionaire also maintained a rather large stake in Oracle (NYSE:ORCL), and despite cutting its size by about 20%, it still is the second largest position he has on record.
Each of these companies pays a respectable dividend yield and has modest growth prospects, but when push comes to shove, it appears Dalio is here for the value. Of the entire technology sector, each of Dalio’s big tech bets lies in the upper one-third in terms on a forward earnings basis. Also, don’t forget that the sheer size of each of these companies gives Dalio a good place to park his capital, while getting solid value and reasonable yield. Bridgewater is the biggest hedge fund in the world, after all.
Closed out of Monsanto, Tesoro and others. Another couple things we noticed were the stocks Dalio was closing out of. Monsanto (NYSE:MON), Tesoro (NYSE:TSO) and Franklin Resources (NYSE:BEN) were the biggest names Bridgewater turned sour on, and it appears that on the surface, each decision was made for different reasons. Monsanto has been dealing with quite a bit of GMO drama this year, and the agricultural company did miss estimates on its last earnings report by about 10%.
Tesoro shares, meanwhile, fell by 30% between mid-May and the end of September, largely due to refining margins that have been trending in the wrong direction. Franklin, lastly, has been booming since a 3:1 split in July, but shares may be reaching fairly valued territory. The investment management holding company trades at 3.3 times book and 15.6 times earnings—both above its historical averages by around 10%.
Obviously, we can’t know exactly why Dalio and Bridgewater decided to sell their stakes in these companies, but if you’re looking to piggyback here, focus on a couple things: (1) the stocks he was bullish on, like IBM, Intel and Hewlett-Packard, and (2) the clear trend behind most of his buys. If you’re looking for a place to park capital while getting a decent yield and valuation, take a look at Dalio’s tech positions.