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 $12.2 billion according to the latest filing. The list value of stock holdings is down -18.4% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period. So it appears Dalio underperformed the market by 24.5% based on what we can tell from the 13F filing.
The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Ray Dalio page. The following table summarizes the firm's largest holdings reported in the last filing:
|Ticker||Name||Holding ($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%|
|GLD||SPDR GOLD TRUST||$483.3||4.0%|
The seven positions above represent 75.7% of the fund's total portfolio. In addition, Bridgewater's largest holdings are in ETFs which is somewhat surprising for a hedge fund that requires healthy management fees.
Bridgewater's 7 Largest Purchases
I also used finbox.io to find Bridgewater's largest buys last quarter. Here's the list of the biggest purchases determined by comparing the last two filings:
|Ticker||Name||Purchased ($mil)||% Of Portfolio|
|CVS||CVS HEALTH CORP||$30.5||0.3%|
|CAH||CARDINAL HEALTH INC||$29.1||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 $38.0 million and the stock now represents 0.3% of the firm's portfolio.
Bridgewater's 7 Biggest Sells
Here's the list of biggest position reductions determined by comparing the last two filings:
|Ticker||Name||Sold ($mil)||% Of Portfolio|
|VWO||VANGUARD INTL EQUITY INDEX F||$889.7||26.0%|
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:
|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.
|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.
Author: Matt Hogan
Expertise: Valuation, financial statement analysis
Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.
Matt can be reached at email@example.com.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.