Ray Dalio Stock Portfolio Q3 2022: Top 5 Small-Cap Stocks

In this article, we discuss the top 5 small-cap stocks from Ray Dalio’s Q3 2022 portfolio. If you want to see more stocks in this selection, check out Ray Dalio Stock Portfolio Q3 2022: Top 10 Small-Cap Stocks. 

5. Adtalem Global Education Inc. (NYSE:ATGE)

Number of Hedge Fund Holders: 18

Bridgewater Associates’ Stake Value: $10,337,000

Adtalem Global Education Inc. (NYSE:ATGE) is an Illinois-based company that provides workforce solutions worldwide. It operates through three segments – Chamberlain, Walden, and Medical and Veterinary. Ray Dalio strengthened his hold on Adtalem Global Education Inc. (NYSE:ATGE) by 82% in the third quarter of 2022, with 283,597 shares worth $10.3 million, representing 0.05% of the 13F securities. It is one of the best small-cap stocks to invest in. 

On November 3, Adtalem Global Education Inc. (NYSE:ATGE) reported a FQ1 non-GAAP EPS of $1.31 and a revenue of $361.2 million, up 61.6% on a year-over-year basis. For the full fiscal year 2023, Adtalem Global Education Inc. (NYSE:ATGE) expects revenue to be in the range of $1,380 million and $1,450 million, and adjusted diluted earnings per share from continuing operations to be within the range of $3.95 to $4.20.

Barrington analyst Alexander Paris on November 4 raised the price target on Adtalem Global Education Inc. (NYSE:ATGE) to $48 from $46 and kept an Outperform rating on the shares following the fiscal Q1 beat. While there are short-term constraints, such as the “long-tail impact” of the pandemic, high inflation, and the tight labor market, these headwinds will recede over time and demand for healthcare professionals will continue to exceed supply for the foreseeable future, the analyst told investors. 

According to Insider Monkey’s data, 18 hedge funds were bullish on Adtalem Global Education Inc. (NYSE:ATGE) at the end of Q2 2022, compared to 17 funds in the prior quarter. 

4. Helen of Troy Limited (NASDAQ:HELE)

Number of Hedge Fund Holders: 20

Bridgewater Associates’ Stake Value: $12,684,000

Helen of Troy Limited (NASDAQ:HELE) is a Texas-based company that provides consumer products in the United States, Canada, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. The company operates through three segments – Home & Outdoor, Health & Wellness, and Beauty. Ray Dalio boosted his stake in Helen of Troy Limited (NASDAQ:HELE) by 92% in Q3 2022, with 131,521 shares worth $12.6 million, representing 0.06% of the total holdings. 

On October 5, Helen of Troy Limited (NASDAQ:HELE) reported a Q3 non-GAAP EPS of $2.27 and a revenue of $521.4 million, outperforming Wall Street forecasts by $0.06 and $2.33 million, respectively. The revenue climbed 9.7% on a year-over-year basis. 

DA Davidson analyst Linda Bolton Weiser on October 6 maintained a Neutral rating on Helen of Troy Limited (NASDAQ:HELE) but slashed the price target on the shares to $115 from $175. The analyst noted the company’s Q3 results were in line with expectations, but the management also cut its FY23 earnings guidance amid retailer inventory reductions. 

Among the hedge funds tracked by Insider Monkey, 20 funds were bullish on Helen of Troy Limited (NASDAQ:HELE) at the end of June 2022, up from 16 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 415,315 shares worth $67.5 million. 

Wedgewood Partners made the following comment about Helen of Troy Limited (NASDAQ:HELE)  in its Q3 2022 investor letter:

“Helen of Troy Limited (NASDAQ:HELE) was a detractor in the quarter as the Company continues to deal with a variety of headwinds. The Company’s healthcare and housewares businesses were major beneficiaries during the pandemic, and both we and the Company have been expecting a normalization of demand in this business. Further, the post-pandemic normalization of demand patterns at major customers such as Walmart, Target, and Amazon have further weighed on the Company – both in terms of fundamentals and in terms of market sentiment, plus stock valuation. Finally, decades-high inflation in key consumer staples categories such as food and other necessities has diverted some spending away from the more discretionary product categories supplied by Helen of Troy. Despite all these headwinds, the Company has been able to hold on to most of the business that it gained during the Pandemic. Revenues in the most recent quarter were +26% above the same quarter two years ago, and we find the stock’s valuation to be extremely attractive at the moment, at levels last seen in the 2008- 2009 recession period, when the Company was under former (and, in our opinion, inept) management.”

3. 360 DigiTech, Inc. (NASDAQ:QFIN)

Number of Hedge Fund Holders: 7

Bridgewater Associates’ Stake Value: $13,509,000

360 DigiTech, Inc. (NASDAQ:QFIN) is a Shanghai-based company that operates a financial technology platform under the 360 Jietiao brand in the People’s Republic of China. Ray Dalio boosted his stake in 360 DigiTech, Inc. (NASDAQ:QFIN) by 138% in the third quarter of 2022, with 1.05 million shares worth $13.50 million. 360 DigiTech, Inc. (NASDAQ:QFIN) is one of the top small-cap stocks in the Bridgewater portfolio. 

On November 14, 360 DigiTech, Inc. (NASDAQ:QFIN) declared a $0.16 per average diluted share quarterly dividend, an 11.1% decrease from its prior dividend of $0.18. The dividend is payable on January 18, 2023 to shareholders of record on December 12. 360 DigiTech, Inc. (NASDAQ:QFIN)’s dividend yield on November 15 came in at 4.72%. 

China Renaissance analyst Cindy Wang on September 29 assumed coverage of 360 DigiTech, Inc. (NASDAQ:QFIN) with a Buy rating and a $20.80 price target. The analyst said the prolonged regulatory overhang on China online lenders will likely end by mid-2023. She called 360 DigiTech, Inc. (NASDAQ:QFIN) her top buy.

According to Insider Monkey’s data, 360 DigiTech, Inc. (NASDAQ:QFIN) was part of 7 hedge fund portfolios at the end of the second quarter of 2022, compared to 10 in the prior quarter. Richard Li’s OLP Capital is the leading position holder in the company, with 4.7 million shares worth $82.3 million. 

2. GDS Holdings Limited (NASDAQ:GDS)

Number of Hedge Fund Holders: 25

Bridgewater Associates’ Stake Value: $13,513,000

GDS Holdings Limited (NASDAQ:GDS) is a Shanghai-based company that develops and operates data centers in the People’s Republic of China. The company provides colocation services including critical facilities space, customer-available power, and managed hosting services. Ray Dalio owns 765,183 shares of GDS Holdings Limited (NASDAQ:GDS) as of Q3 2022, worth $13.5 million. The billionaire strengthened his hold on the stock by 8% during the September quarter. 

On August 26, RBC Capital analyst Jonathan Atkin downgraded GDS Holdings Limited (NASDAQ:GDS) to Sector Perform from Outperform with a price target of $33, down from $41. 

According to Insider Monkey’s data, 25 hedge funds were long GDS Holdings Limited (NASDAQ:GDS) at the end of the second quarter of 2022, compared to 26 funds in the last quarter. Joel Ramin’s 12 West Capital Management is the largest stakeholder of the company, with 7.3 million shares worth $245 million. 

Here is what Baron Real Estate Fund has to say about GDS Holdings Limited (NASDAQ:GDS) in its Q1 2022 investor letter:

“Following a 66% correction in its share price from a peak of $117 per share in February 2021, we recently reacquired shares in GDS Holdings Limited (GDS) at an average cost of $39 per share. GDS is the leading developer and operator of data centers in China. Following several years of strong share price performance, the shares of GDS corrected sharply in 2021 due to investor concerns about China’s increased regulatory scrutiny of the technology industry and a slowdown in its economy, increased competition, evidence of further tensions with U.S. regulatory agencies, and a substantial correction in technology shares broadly. At our average purchase price of $39, we believe these concerns are sufficiently discounted in the shares and remain optimistic about the company’s long-term potential to generate strong growth and increase the intrinsic value of the business.

In February 2021, three highly respected institutional investors-Sequoia China, ST Telemedia Global Data Centers, and an Asian sovereign wealth fund-invested $620 million dollars in GDS at a slight premium to the Fund’s purchase price. This was a major vote of confidence in the management team and the growth opportunity ahead (we suspect there is meaningful additional capital available to support GDS’s expansion plan should volatility in the public equity markets persist). We continue to believe that GDS is well positioned to benefit from the Chinese digital economy, which is in its early growth phase, with relatively low national internet access penetration and expectations for ongoing strong growth in public cloud spending.

GDS’ shares are valued at a discounted cash flow multiple to its global data center peers despite the fact that the company is projected to grow its cash flow 3 to 4 times faster over the next few years.”

1. Silvergate Capital Corporation (NYSE:SI)

Number of Hedge Fund Holders: 23

Bridgewater Associates’ Stake Value: $39,856,000

Silvergate Capital Corporation (NYSE:SI) is one of the premier small-cap stocks from Ray Dalio’s portfolio. Silvergate Capital Corporation (NYSE:SI) is a bank holding company for Silvergate Bank, providing banking products and services to business and individual clients in the United States. Ray Dalio owns 528,949 shares of the company worth about $40 million, representing 0.20% of the total Q3 portfolio. 

On November 14, Wedbush analyst David Chiaverini maintained an Outperform rating on Silvergate Capital Corporation (NYSE:SI) but trimmed the price target on the shares to $70 from $85 after the company issued a statement that FTX is a deposit-only relationship that accounts for “less than 10%” of its crypto-related deposits, which totaled $12 billion at the end of Q3 2022. 

According to Insider Monkey’s data, 23 hedge funds were bullish on Silvergate Capital Corporation (NYSE:SI) at the end of the second quarter of 2022, compared to 35 funds in the preceding quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP held the leading stake in the company, comprising 1.3 million shares worth $69 million. 

Here is what Artisan Small Cap Fund has to say about Silvergate Capital Corporation (NYSE:SI) in its Q3 2021 investor letter:

“Silvergate Capital is the leading regulated provider of traditional banking solutions to the digital currency industry (DCI). Notable customers include Coinbase, Paxos, Circle, Binance, Gemini, Jane Street, Fidelity, ICE, PayPal and the CME Group. We believe the company is well positioned to grow as digital assets become an increasing part of the economy. As a bridge between regulated financial markets and the crypto industry, Silvergate has established itself as a core infrastructure layer for trading digital assets. The company provides regulated banking services to the DCI to capture low-cost funding deposits, which can be monetized through its securities and loan portfolio. As of Q3, the company had $11 billion of deposits from over 1,300 digital currency customers and processed $600 million in transaction volumes over the last 12 months through the Silvergate Exchange Network (SEN). Today, the majority of SEN transactions are not being monetized to reduce friction of growing the network; however, we believe this could become an additional profit cycle driver over time as new products are launched or if the technology is adopted for use cases such as cross-border remittance or commerce.”

You can also take a look at 16 Biggest Gig Economy Companies in the World and 11 Best Materials Dividend Stocks To Buy. 

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