Ray Dalio is the founder of Bridgewater Associates. Bridgewater is the world’s largest hedge fund but its 13F portfolio is slightly more than $7 billion. Ray Dalio manages $85 billion in hedge funds and other investment vehicles. He has years of outstanding performance which illustrate his capability as an investor. Ray Dalio’s Bridgewater returned 9.5% in 2008, 4% in 2009, and 45% in 2010.
Since the first quarter of 2011, Ray Dalio has been very verbal about his market expectations. In the next 10 years, he believes emerging market currencies and gold will play a bigger role. Therefore, he is insanely bullish about the emerging markets and gold. More recently, Ray Dalio expressed concerns about the highly indebted countries like U.S. He believes they will eventually have to opt for printing money in order to deal with the rising debt. Consequently, their currency and bond markets will collapse. In short, Ray Dalio predicts another Recession in 18 Months.
During the second quarter of 2011, Ray Dalio reduced Microsoft Corp. (MSFT) by 13%. Previously in the first quarter, he had increased MSFT by 1%. Microsoft is still among the top 5 holdings of Bridgwater’s 13F portfolio. Since June, MSFT has lost 3%. Here are Ray Dalio’s 25 top stock picks:
Company | Ticker | Value (x1000) | Activity | Return Since June |
S&P 500 ETF | 2712828 | 6% | -10% | |
Emerging Markets ETF | 926076 | 22% | -13% | |
ISHARES EMERGING MKT ETF | 639639 | 26% | -13% | |
Novellus | 49723 | 108% | -19% | |
Microsoft Corp | MSFT | 44138 | -13% | -3% |
General Electric | 43590 | 26% | -16% | |
Applied Materials | 42550 | 55% | -11% | |
NetApp Inc | 39033 | 156% | -18% | |
Computer Sciences Corp | 37993 | 86% | -23% | |
American Express | 37977 | 175% | -13% | |
Parker Hannifin | 34551 | 144% | -22% | |
ISHARES INV GR CORP BD | 33933 | 10% | 3% | |
Motorola Solutions Inc | 33014 | 74% | -13% | |
Eastman Chemical Co | 32983 | 86% | -17% | |
Dow Chemical Co/The | 32954 | 196% | -18% | |
Robert Half International | 32675 | 169% | -15% | |
Illinois Tool Works Inc | 32129 | 80% | -20% | |
Microchip Tech | 32020 | 61% | -15% | |
Kennametal Inc | 30639 | 99% | -17% | |
ManpowerGroup | 30496 | 195% | -23% | |
Nordstrom | 30085 | 92% | -6% | |
Jabil Circuit | 29676 | 136% | -19% | |
Fedex | 29413 | 118% | -15% | |
Cypress Semi | 29347 | 88% | -13% | |
Dillard's Inc | 28941 | 54% | -20% |
SPDR S&P 500 ETF is Ray Dalio’s largest holding. It makes up more than 43% of Bridgewater’s 13F portfolio. During the second quarter, he increased SPY holdings by 6%. He had previously increased it by 5% in the first quarter of 2011. He has the largest position in SPY with shares worth $2.7 billion. Since June, SPY has lost 10%. Steven Cohen’s SAC Capital Advisors and Michael Johnston’s Steelhead Partners have put options of SPY.
Ray Dalio increased his General Electric holdings by 26% during the second quarter. He owns $43.5 million worth of GE. It is the 6th largest holding of Bridgewater’s 13F portfolio. Since the end of June, General Electric has lost 16%. Ken Fisher is also another investor who is bullish about GE. He added 83% during the second quarter of 2011. As of now he owns 31 million shares of the company.
Ray Dalio purchased 411,267 shares of Motorola Solutions Inc during the first quarter of 2011. In the second quarter, he increased his Motorola holdings by 74%. Since the end of the second quarter, Motorola has returned -13%. Carl Icahn’s Icahn Capital has the largest position in Motorola. Icahn received over 30 million shares of the company during the first quarter of 2011 after the split.
Ray Dalio’s 25 stock picks lost 12% since the end of June. It underperformed the market by 1.5 percentage points. Ray Dalio’s flagship fund is up by more than 20% in 2011. It was also up around 5% during the first week of August when most stocks declined sharply. It seems like Ray Dalio’s strength is in macro calls, not stock picking. Consequentially, we do not recommend imitating Ray Dalio’s stock picks at this moment.
