Ray Dalio's Top 25 Stock Picks: We Don't Recommend Imitating Right Now

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Includes: AMAT, AXP, CSC, CY, DDS, DOW, EEM, EMN, FDX, GE, ITW, JBL, JWN, KMT, LQD, MAN, MCHP, MSFT, MSI, NTAP, NVLS-OLD, PH, RHI, SPY, VWO
by: Insider Monkey

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. (NASDAQ: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

SPY

2712828

6%

-10%

Emerging Markets ETF

VWO

926076

22%

-13%

ISHARES EMERGING MKT ETF

EEM

639639

26%

-13%

Novellus

NVLS-OLD

49723

108%

-19%

Microsoft Corp

MSFT

44138

-13%

-3%

General Electric

GE

43590

26%

-16%

Applied Materials

AMAT

42550

55%

-11%

NetApp Inc

NTAP

39033

156%

-18%

Computer Sciences Corp

CSC

37993

86%

-23%

American Express

AXP

37977

175%

-13%

Parker Hannifin

PH

34551

144%

-22%

ISHARES INV GR CORP BD

LQD

33933

10%

3%

Motorola Solutions Inc

MSI

33014

74%

-13%

Eastman Chemical Co

EMN

32983

86%

-17%

Dow Chemical Co/The

DOW

32954

196%

-18%

Robert Half International

RHI

32675

169%

-15%

Illinois Tool Works Inc

ITW

32129

80%

-20%

Microchip Tech

MCHP

32020

61%

-15%

Kennametal Inc

KMT

30639

99%

-17%

ManpowerGroup

MAN

30496

195%

-23%

Nordstrom

JWN

30085

92%

-6%

Jabil Circuit

JBL

29676

136%

-19%

Fedex

FDX

29413

118%

-15%

Cypress Semi

CY

29347

88%

-13%

Dillard's Inc

DDS

28941

54%

-20%

Click to enlarge

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.

Disclosure: I am long SPY, MSFT.