By Matt Hogan
Ray Dalio’s firm just released its quarterly 13F filing with the SEC on February 13th. With the value of listed holdings down 18.4%, here’s what the billionaire hedge fund manager has been up to.
RAY DALIO’S PRINCIPLES
Many investors are well aware of the investing prowess of Ray Dalio. He’s the billionaire investor, hedge fund manager, and philanthropist that founded one of the largest hedge funds on Wall Street. Dalio’s also widely known for his 123-page manifesto (Principles) where he gives readers a glimpse into his philosophies about living life and managing people and organizations. In the text’s abstract he explains:
“Truth, more precisely an accurate understanding of reality is the essential foundation for producing good results.”
Principles is a required read for all Bridgewater employees which hints at how crucial these guidelines are to the firm’s investing strategy and resulting performance. Dalio released an expanded and revised edition of the manifesto on September 19th. The market has welcomed the new book which currently ranks #6 on Amazon’s most read books.
But has Dalio’s time commitment to publishing taken a toll on his fund’s performance? I review Bridgewater’s portfolio below.
BRIDGEWATER’S LARGEST HOLDINGS
On February 13th, Ray Dalio’s firm Bridgewater filed its quarterly Form 13F regulatory filing. I reviewed the filing to gain a glimpse into the firm’s large portfolio.
Bridgewater’s stock portfolio totals $12.2 billion according to the latest filing. The list value of stock holdings is down -18.4% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period. So it appears Dalio underperformed the market by 24.5% based on what we can tell from the 13F filing.
The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Ray Dalio page. The following table summarizes the firm’s largest holdings reported in the last filing:
Bridgewater Largest Holdings
Ticker Name Holding ($mil) % Of Portfolio
VWO VANGUARD INTL EQUITY INDEX F $3,166.1 26.0%
SPY SPDR S&P 500 ETF TR $2,526.2 20.8%
EEM ISHARES TR $1,536.9 12.6%
IEMG ISHARES INC $885.0 7.3%
GLD SPDR GOLD TRUST $483.3 4.0%
EWZ ISHARES INC $312.6 2.6%
LQD ISHARES TR $300.8 2.5%
The seven positions above represent 75.7% of the fund’s total portfolio. In addition, Bridgewater’s largest holdings are in ETFs which is somewhat surprising for a hedge fund that requires healthy management fees.
BRIDGEWATER’S 7 LARGEST PURCHASES
I also used finbox.io to find Bridgewater’s largest buys last quarter. Here’s the list of the biggest purchases determined by comparing the last two filings:
Bridgewater 7 Largest Purchases
Ticker Name Purchased ($mil) % Of Portfolio
PCG PG&E CORP $38.0 0.3%
EWZ ISHARES INC $37.4 2.6%
CVS CVS HEALTH CORP $30.5 0.3%
CAH CARDINAL HEALTH INC $29.1 0.2%
CELG CELGENE CORP $21.4 0.2%
PPL PPL CORP $20.9 0.2%
WBA WALGREENS BOOTS ALLIANCE INC $20.6 0.2%
The largest purchase for the quarter was PG&E Corporation. Bridgewater increased its position in the company by $38.0 million and the stock now represents 0.3% of the firm’s portfolio.
BRIDGEWATER’S 7 BIGGEST SELLS
Here’s the list of biggest position reductions determined by comparing the last two filings:
Bridgewater 7 Biggest Sells
Ticker Name Sold ($mil) % Of Portfolio
EEM ISHARES TR $1,546.6 12.6%
VWO VANGUARD INTL EQUITY INDEX F $889.7 26.0%
IEMG ISHARES INC $525.7 7.3%
KR KROGER CO $42.3 0.3%
EWY ISHARES INC $34.1 0.3%
M MACYS INC $31.4 0.0%
DVA DAVITA INC $21.1 0.1%
The largest stock sale for the quarter was Kroger Company. Bridgewater reduced its position in the company by $42.3 million and the stock now represents 0.3% of the firm’s portfolio. Shares of Kroger increased by 26.7% in the last three months.
BRIDGEWATER’S 7 BULLISH ANALYST TARGETS
Banks and brokerages often release 12 to 18 month price targets for the stocks they cover. Analyst upgrades and downgrades alone can often impact a company’s stock price.
“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” – Benjamin Graham
The table below ranks stocks in Bridgewater’s portfolio with most bullish analyst targets:
Bridgewater 7 Bullish Analyst Targets
Ticker Name Upside (Analyst Target) % Of Portfolio
SWN SOUTHWESTERN ENERGY CO 81.1% 0.2%
DISH DISH NETWORK CORP 61.1% 0.1%
NFX NEWFIELD EXPL CO 52.4% 0.1%
DVN DEVON ENERGY CORP NEW 42.7% 0.1%
CNQ CANADIAN NAT RES LTD 38.4% 0.1%
MU MICRON TECHNOLOGY INC 37.5% 0.2%
GG GOLDCORP INC NEW 35.9% 0.0%
Southwestern Energy Company (NYSE: SWN) appears to be the most undervalued stock in the fund based on the average price target from Wall Street analysts.
BRIDGEWATER’S RECENT PRICE PULL-BACK STOCKS
To find stocks in the firm’s portfolio that may be unpopular at the moment and trading at cheap valuations, I ranked the firm’s holdings by price pullbacks. The ranking table below lists the stocks in Bridgewater’s portfolio by stock price performance over the last 30 days.
Bridgewater Recent Price Pull-Back Stocks
Ticker Name Price 1-mo Ago Current Price % Change 1-mo
SWN SOUTHWESTERN ENERGY CO $5.47 $3.66 -33.1%
NFX NEWFIELD EXPL CO $34.75 $26.14 -24.8%
GE GENERAL ELECTRIC CO $18.76 $14.69 -21.7%
DVN DEVON ENERGY CORP NEW $44.04 $35.09 -20.3%
SCG SCANA CORP NEW $44.05 $35.77 -18.8%
CLF CLEVELAND CLIFFS INC $8.68 $7.13 -17.9%
CNQ CANADIAN NAT RES LTD $37.14 $30.94 -16.7%
Southwestern Energy Company is at the top of the list again. The company’s stock has fallen by -33.1% over the last month. It may be worth taking a closer look at the stock, especially after this recent decline.
Managers with more than $100 million in qualifying assets under management are required to disclose their holdings to the SEC each quarter via 13F filings. Qualifying assets include long positions in U.S. equities and ADRs, call/put options, and convertible debt securities.
Shorts, cash positions, foreign investments and other assets are not included. It is important to note that these filings are due 45 days after the quarter end date. Therefore, Bridgewater’s holdings above represent positions held as of December 31st and not necessarily reflective of the fund’s current stock holdings.
However, most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of the largest hedge funds on Wall Street can be a powerful way to narrow down the list.
The following article was republished with permission from Vintage Value Investing.
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