In this article, we discuss 10 finance stocks to buy according to billionaire Ray Dalio. If you want to skip our detailed analysis of these stocks, go directly to 5 Finance Stocks to Buy According to Billionaire Ray Dalio.
Ray Dalio, an American billionaire hedge fund manager and an investor known for his business acumen, founded Bridgewater Associates in 1975, which is one of the most renowned hedge funds in the world, headquartered out of New York. According to the third quarter 13F filings, the portfolio at Bridgewater Associates is valued at $18.2 billion, up approximately $10 billion year-over-year.
Ray Dalio holds a Bachelor’s in finance from Long Island University, and completed his MBA from Harvard Business School in 1973. In his initial trading days, Dalio worked out of his home, from a makeshift office in a barn. Later, he started trading commodity futures at the New York Stock Exchange. After working at Dominick & Dominick LLC and Shearson Hayden Stone, Dalio finally ventured out on his own in 1975 to start his hedge fund.
Bridgewater Associates was initially a wealth advisory firm that dealt in currencies and interest rates, where Dalio managed the clients retained from his tenure as a trade broker at Shearson Hayden Stone. Bridgewater Associates’ first notable achievement came along when McDonald’s Corporation (NYSE:MCD) became the fund’s client, which was then followed by a stream of notable customers, including The World Bank’s pension funds.
Dalio’s intuition about market mechanisms led him to timely go long on Treasury bonds, short the dollar, and gold and other reliable assets, which resulted in Bridgewater Associates making a 19% return on its Pure Alpha fund in 2008, when the entire market was facing a significant financial crisis.
Serving institutional clients such as pension funds, foundations, endowments, and central banks, Dalio employs a quantitative investment strategy based on market patterns and algorithms, combined with years of experience and a strong intuition about market movements. Dalio is known to refer to himself as a “hyperrealist”, stating that he focuses on solid facts rather than adding abstract judgements to his investment decisions.
The Q3 13F portfolio at Bridgewater Associates is concentrated in the finance, healthcare, real estate, consumer discretionary, and consumer staples sectors. The most notable stocks from billionaire Ray Dalio’s Q3 portfolio include Alibaba Group Holding Limited (NYSE:BABA), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO).
Ray Dalio of Bridgewater Associates
Our Methodology
We used the third quarter portfolio of Ray Dalio to select his top 10 finance stocks, ranking them according to the billionaire’s stake value in each holding.
Finance Stocks to Buy According to Billionaire Ray Dalio
10. U.S. Bancorp (NYSE:USB)
Bridgewater Associates’ Stake Value: $34,747,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.19%
Number of Hedge Fund Holders: 42
U.S. Bancorp (NYSE:USB) is an American bank holding company which operates via its primary subsidiary, U.S. Bank National Association, and is one of the largest banking institutions in the United States. U.S. Bancorp (NYSE:USB) offers its clients multiple financial services including consumer banking, corporate banking, insurance, investment banking, mortgage loans, private banking, private equity, wealth management, and financial analysis.
Ray Dalio added 15% to his existing stake in U.S. Bancorp (NYSE:USB) in the third quarter, holding a total of 584,565 shares, worth $34.7 million. The U.S. Bancorp (NYSE:USB) stock accounts for 0.19% of the billionaire’s Q3 securities.
U.S. Bancorp (NYSE:USB), on December 21, declared a quarterly cash dividend of $0.46 per share, payable on January 18, 2022, to shareholders of record on December 31, 2021.
Publishing its third quarter results on October 14, U.S. Bancorp (NYSE:USB) posted earnings per share of $1.30, beating estimates by $0.14. The $5.86 billion revenue dropped 1.26% year-over-year, but outperformed estimates by $105.32 million.
UBS analyst Erika Najarian on December 9 initiated coverage of U.S. Bancorp (NYSE:USB) with a Buy rating and a $70 price target, calling the stock “not so boring anymore”, owing to 300 basis points of ROTCE outperformance.
According to the hedge funds tracked by Insider Monkey, 42 funds were long U.S. Bancorp (NYSE:USB) in the third quarter, with Berkshire Hathaway as the largest company stakeholder, owning a $7.5 billion position.
In addition to Alibaba Group Holding Limited (NYSE:BABA), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO), U.S. Bancorp (NYSE:USB) is a notable stock pick of billionaire Ray Dalio.
Here is what Mairs & Power has to say about U.S. Bancorp (NYSE:USB) in their Q4 2020 investor letter:
“On the negative side, one of the Fund’s biggest detractor in 2020 was U.S. Bancorp (USB). Like all banks, U.S. Bank was hurt by the difficult interest rate environment and credit cycle concerns. We believe banks are strong enough to survive the current sector doldrums, and they remain some of the market’s most attractive opportunities.”
9. Lufax Holding Ltd (NYSE:LU)
Bridgewater Associates’ Stake Value: $35,668,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.19%
Number of Hedge Fund Holders: 14
Lufax Holding Ltd (NYSE:LU), a financial technology company from China that specializes in wealth management and retail credit facilitation, is one of the best finance stocks to buy according to billionaire Ray Dalio. Bridgewater Associates boosted its stake in Lufax Holding Ltd (NYSE:LU) by 103% as of Q3 2021, holding 5.10 million shares worth $35.6 million.
In the third quarter, 14 hedge funds in the database of Insider Monkey reported owning stakes in Lufax Holding Ltd (NYSE:LU), worth $225 million, as compared to 19 funds holding stakes in Lufax Holding Ltd (NYSE:LU) valued at $357.8 million in the preceding quarter. Farallon Capital is the leading company stakeholder, with 14.35 million shares worth $100.2 million.
Reporting its Q3 results on November 9, Lufax Holding Ltd (NYSE:LU) posted earnings per share of $0.26, exceeding estimates by $0.01. The quarter revenue equaled $2.49 billion, missing estimates by $57.45 million.
On November 2, Bernstein analyst Kevin Kwek upgraded Lufax Holding Ltd (NYSE:LU) to Market Perform from Underperform with a $6 price target. The analyst stated that the company’s shares are near the level that assumes compressed margins, creating a balanced risk/reward scenario.
8. BlackRock, Inc. (NYSE:BLK)
Bridgewater Associates’ Stake Value: $50,764,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.27%
Number of Hedge Fund Holders: 44
Increasing its position in the company by 18% in Q3, Bridgewater Associates owns 60,530 shares of BlackRock, Inc. (NYSE:BLK), valued at $50.7 million, representing 0.27% of the firm’s total investments. BlackRock, Inc. (NYSE:BLK) is a multinational investment management firm from New York City, operating across 100 countries. BlackRock, Inc. (NYSE:BLK) is the largest asset manager globally, offering risk and wealth management services to clients worldwide.
BlackRock, Inc. (NYSE:BLK) reported earnings for Q3 on October 13, announcing an EPS of $10.95, beating estimates by $1.44. The revenue jumped 15.59% year-over-year to $5.05 billion, exceeding estimates by $230.32 million.
Deutsche Bank analyst Brian Bedell raised the price target on BlackRock, Inc. (NYSE:BLK) to $1,141 from $1,024 and kept a Buy rating on the shares on December 17. The analyst heads into 2022 “even more constructive than at the start of 2021” on the brokers, asset managers, and exchanges sector. He reiterated that many of his Buy rated stocks may experience the strongest returns in 2022.
AQR Capital Management is one of the leading BlackRock, Inc. (NYSE:BLK) stakeholders as of September 2021, with a $230.8 million position in the company. Overall, 44 hedge funds in the Q3 database of Insider Monkey were bullish on the stock.
Here is what Baron FinTech Fund has to say about BlackRock, Inc. (NYSE:BLK) in its Q1 2021 investor letter:
“During the quarter, we initiated a position in BlackRock Inc., the world’s largest investment manager with $9 trillion in assets under management. BlackRock offers an array of products across equities, fixed income, alternatives, and cash management to institutional and retail investors worldwide. About one-quarter of BlackRock’s assets under management is actively managed, and the rest is in passive index funds and iShares-branded ETFs. The company offers technology services including the investment and risk management platform, Aladdin, as well as other advisory services and solutions. Over the five years ending December 31, 2020, assets under management and earnings per share grew at compound annual growth rates of 13% and 12%, respectively.
We believe BlackRock is well positioned for continued growth given its diverse product offering, global distribution, brand recognition, and capable management team. With most of its assets in index funds and ETFs, BlackRock is a prime beneficiary of the ongoing shift to passive investing. The company also benefits from increasing demand for sustainable investment strategies and “barbell” strategies that use a combination of low-cost index funds, active and illiquid alternatives products. BlackRock fits squarely within our Tech-Enabled Financials theme given its longstanding commitment to innovation and proprietary technology platform, Aladdin, which serves as the investment and risk management system for both BlackRock and a growing number of institutional investors around the world. We expect BlackRock’s earnings per share will continue to grow at a double digit annual rate over a market cycle through a combination of mid-single-digit growth in assets under management from net inflows, market appreciation, low to mid-teens revenue growth in technology services, modest margin expansion, and share repurchases.”
7. The Goldman Sachs Group, Inc. (NYSE:GS)
Bridgewater Associates’ Stake Value: $53,260,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.29%
Number of Hedge Fund Holders: 74
The Goldman Sachs Group, Inc. (NYSE:GS), a multinational financial services corporation and investment bank, is one of the top finance stock picks of billionaire Ray Dalio. His hedge fund elevated its position in The Goldman Sachs Group, Inc. (NYSE:GS) by 24% in Q3, holding 140,889 shares of the company at the end of September, worth $53.2 million.
In the third quarter earnings report, published on October 15, The Goldman Sachs Group, Inc. (NYSE:GS) announced an EPS of $14.93, exceeding estimates by $4.92. Revenue over the period totaled $13.61 billion, gaining 26.22% from the prior-year quarter, outperforming estimates by $1.99 billion.
Morgan Stanley analyst Betsy Graseck upgraded The Goldman Sachs Group, Inc. (NYSE:GS) to Equal Weight from Underweight with a $479 price target. The analyst stated that the new company CEO is “laser focused” on delivering on The Goldman Sachs Group, Inc. (NYSE:GS)’s ROE/ROTCE targets.
Boykin Curry’s Eagle Capital Management is the largest stakeholder of The Goldman Sachs Group, Inc. (NYSE:GS) as of September 2021, with 3.66 million shares worth $1.38 billion. According to Insider Monkey’s Q3 records, 74 elite funds were long The Goldman Sachs Group, Inc. (NYSE:GS), up from 61 funds in the previous quarter.
Here is what Ariel Investments has to say about The Goldman Sachs Group, Inc. (NYSE:GS) in its Q2 2021 investor letter:
“Goldman Sachs Group Inc. (GS) returned +16.45%. Goldman has posted a series of excellent quarterly results. Merger and equity offering activity has been robust with trading profits bolstered by strong capital market volumes. Goldman’s asset management business has also performed well. Regulators recently moved to allow most large investment banks to return capital to shareholders through dividends and share repurchases. Fundamentally, we think Goldman Sachs is attractively priced at approximately 11 times earnings and a very reasonable multiple of book value.”
6. The Charles Schwab Corporation (NYSE:SCHW)
Bridgewater Associates’ Stake Value: $55,157,000
Percentage of Bridgewater Associates’ 13F Portfolio: 0.30%
Number of Hedge Fund Holders: 59
The Charles Schwab Corporation (NYSE:SCHW) is a multinational financial services corporation specializing in commercial banking, stock brokerage, and wealth management, in addition to operating an electronic trading platform for its retail and institutional clients. Billionaire Ray Dalio added 22% to his previous position in The Charles Schwab Corporation (NYSE:SCHW) as of the third quarter, owning a total of 757,235 shares of the company, worth $55.1 million.
On October 15, The Charles Schwab Corporation (NYSE:SCHW) posted its Q3 results, announcing earnings per share of $0.84, exceeding estimates by $0.03. Revenue for the quarter came in at $4.57 billion, beating estimates by $47.10 million.
Deutsche Bank analyst Brian Bedell on December 17 raised the price target on The Charles Schwab Corporation (NYSE:SCHW) to $120 from $100 and kept a Buy rating on the shares, citing a strong outlook for the brokers, asset managers, and exchanges sector heading into 2022.
Egerton Capital Limited, the biggest stakeholder of The Charles Schwab Corporation (NYSE:SCHW), extending its position in the company by 127% in the third quarter, holding a stake worth over $1 billion. Overall, 59 hedge funds tracked by Insider Monkey in Q3 were bullish on the stock.
In addition to Alibaba Group Holding Limited (NYSE:BABA), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO), The Charles Schwab Corporation (NYSE:SCHW) is a top stock pick of Ray Dalio’s Bridgewater Associates.
Here is what Ariel Fund & Ariel Appreciation Fund has to say about The Charles Schwab Corporation (NYSE:SCHW) in its Q3 2021 investor letter:
“Additionally, financial services provider Charles Schwab Corporation (SCHW) was another strong performer in the period. Management has made progress increasing new and existing customer engagement through its multichannel approach and low-cost, high value product offerings—bolstering the company’s competitive positioning. Elevated interest rate expectations have been another driver of performance as SCHW reinvests deposits in securities and earns a spread. In our view, SCHW has the ability to weather various macro-economic and competitive pressures by flexing its scale and customer centric focus in support of the company’s industry leading cost advantage. We also believe the TD Ameritrade acquisition will create incremental value and further enhance SCHW’s market place standing and long-term growth trajectory.”
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Disclosure: None. 10 Finance Stocks to Buy According to Billionaire Ray Dalio is originally published on Insider Monkey.
