In this article, we discuss the 10 new stock picks of billionaire Ray Dalio.
Wall Street titans have been battling inflation and rate hikes in the past few months, scrambling to shield their portfolios from risk as geopolitical tensions in Europe and Asia cause a further dent at the stock market. Ray Dalio, the billionaire chief of Bridgewater Associates, has been especially vocal about the impact that the developing market dynamics might have on the American economy in the long-term. Dalio managed an equity portfolio worth over $23 billion at end of the second quarter of 2022, with the top holdings focused on the healthcare and consumer goods sectors.
In a LinkedIn post at the end of the second quarter of 2022, Dalio warned that the aggressive monetary policies of the central bank in the United States would lead to stagflation. Greg Jensen, another top executive at Bridgewater, has echoed these sentiments as well, telling Bloomberg in late August that the full impact of the hawkish Federal Reserve had still not been fully priced into the market, predicting that it would lead to a decline of 20% to 25% overall in the grand scheme of things.
Stagflation is an economic condition that comes with high inflation. During this period, economic growth and employment are not robust enough, leading to stalled growth models that stop short of an all–out recession. The recent moves that Dalio has made at the market illustrate his investing philosophy much better. Some of the top stocks in the Bridgewater portfolio at the end of the second quarter of 2022 included Walmart Inc. (NYSE:WMT), The Coca-Cola Company (NYSE:KO), and The Procter & Gamble Company (NYSE:PG).
Our Methodology
These securities were picked from the investment portfolio of Bridgewater Associates at the end of the second quarter of 2022. Only stocks that are a new addition to the portfolio, compared to filings for the first quarter of the year, were selected. The analyst ratings of each company are also discussed to provide readers with some more context about their investment decisions. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
New Stock Picks of Billionaire Ray Dalio
10. American Eagle Outfitters, Inc. (NYSE:AEO)
Number of Hedge Fund Holders: 29
American Eagle Outfitters, Inc. (NYSE:AEO) operates as a specialty retailer. Latest data shows that Bridgewater Associates owned over 30,200 shares of American Eagle Outfitters, Inc. at the end of the second quarter of 2022 worth $338,000, representing a very small portion of the portfolio.
On August 1, Cowen analyst Jonna Kim downgraded American Eagle Outfitters, Inc. stock to Market Perform from Outperform and reduced the price target to $13 from $25, noting that markdown pressures were a near-term headwind for the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Select Equity Group is a leading shareholder in American Eagle Outfitters, Inc., with 17.7 million shares worth more than $198 million.
Just like Walmart Inc., The Coca-Cola Company, and The Procter & Gamble Company, American Eagle Outfitters, Inc. is one of the value stocks that elite investors are flocking to.
9. DocuSign, Inc. (NASDAQ:DOCU)
Number of Hedge Fund Holders: 37
DocuSign, Inc. (NASDAQ:DOCU) offers cloud-based software services. Latest filings show that Bridgewater Associates owned over 17,200 shares of DocuSign, Inc. at the end of the second quarter of 2022 worth $991,000, representing a very small portion of the portfolio.
On September 2, JMP Securities analyst Patrick Walravens maintained an Outperform rating on DocuSign, Inc. stock and lowered the price target to $84 from $151, noting the firm had an expansion opportunity in a Fortune 500 financial services company.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in DocuSign, Inc., with 5.2 million shares worth more than $299 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and DocuSign, Inc. was one of them. Here is what the fund said:
“DocuSign, Inc., a maker of e-signature and digital contract management software, got caught up in this trend. The stock came under pressure in December on weak third-quarter billings and a lower than expected outlook. The stock is now trading at pre-COVID-19 levels even though the company is much more profitable today and maintains a dominant position in an increasingly mobile economy with its digital signature and contract services.”
8. New Oriental Education & Technology Group Inc. (NYSE:EDU)
Number of Hedge Fund Holders: 22
New Oriental Education & Technology Group Inc. provides private educational services across China. Securities filings reveal that Bridgewater Associates owned over 1.3 million shares of New Oriental Education & Technology Group Inc. at the end of June 2022 worth $27 million, representing 0.11% of the portfolio.
On July 29, Bank of America analyst Lucy Yu upgraded New Oriental Education & Technology Group Inc. stock to Buy from Neutral and raised the price target to $36.60 from $18.80, noting the share price of the firm was on par with the new cash.
At the end of the second quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth $721 million in New Oriental Education & Technology Group Inc., compared to 23 in the preceding quarter worth $260 million.
In its Q3 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and New Oriental Education & Technology Group Inc. was one of them. Here is what the fund said:
“The quarter’s leading detractors were Chinese companies that were impacted by the CCP’s regulatory crackdown and liquidity concerns at property developer Evergrande. New Oriental Education & Technology Group Inc.—the largest provider of private educational services in China—moved sharply lower in July after policymakers implemented new rules which effectively turned Chinese tutoring companies into non-profits. Looking at New Oriental Education & Technology Group Inc., we closed our position as soon as government policy became clear and used the proceeds to allocate to existing holdings.”
7. VICI Properties Inc. (NYSE:VICI)
Number of Hedge Fund Holders: 26
VICI Properties Inc. (NYSE:VICI) is a real estate investment trust that focuses on gaming and entertainment properties. According to the latest data, Bridgewater Associates owned more than 9,000 shares of VICI Properties Inc. at the end of the second quarter of 2022 worth $273,000, representing a small portion of the portfolio.
On August 24, JMP Securities analyst Mitch Germain initiated coverage of VICI Properties Inc. stock with an Outperform rating and a price target of $38, noting that the strategy of the firm had been stress tested in recent months.
At the end of the second quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes worth $287 million in VICI Properties Inc., compared to 36 in the previous quarter worth $998 million.
6. Foot Locker, Inc. (NYSE:FL)
Number of Hedge Fund Holders: 28
Foot Locker, Inc. (NYSE:FL) operates as an athletic footwear and apparel retailer. Regulatory filings indicate that Bridgewater Associates owned over 50,491 shares of Foot Locker, Inc. at the end of June 2022 worth $1.2 million, representing a very small portion of the portfolio.
On August 23, Credit Suisse analyst Michael Binetti maintained a Neutral rating on Foot Locker, Inc. stock and raised the price target to $40 from $31, noting the firm had the potential to translate to a better EPS path forward.
At the end of the second quarter of 2022, 28 hedge funds in the database of Insider Monkey held stakes worth $228 million in Foot Locker, Inc., up from 21 in the previous quarter worth $177 million.
Alongside Walmart Inc., The Coca-Cola Company, and The Procter & Gamble Company, Foot Locker, Inc. is one of the value stocks that hedge funds are monitoring.
In its Q1 2022 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Foot Locker, Inc. was one of them. Here is what the fund said:
“Finally, Foot Locker, Inc. came under significant pressure during the quarter, with the stock down more than 50% from its highs and valuation not far from early 2020 lows. Nike continues to place a greater focus on their Direct-to-Consumer business, which will decrease their contribution to Foot Locker’s total sales, retreating to historical averages of 50% by 2023. While a near-term headwind to sales, management plans to offset the lost business by expanding distribution to other leading brands, rolling out larger neighborhood free-standing stores, and expanding two new growth banners (WSS & Atmos). WSS stores will provide an off-mall presence and focus on the rapidly growing and underserved Hispanic market. Atmos will provide Foot Locker with the ability to expand into Japan and Asia sneaker market with their digitally led business model. These new growth concepts have a combined potential to add more than $1B in sales by 2024. The company’s balance sheet remains very strong with $800M in cash and management is increasing returns to shareholders through raising the dividend by 40% and announcing a $1.2B share buyback (more than 40% of the float at current share prices). With the next 12 to 18 months as a transition period for the company, the share price weakness provides attractive reward/risk investment potential, near 3x Enterprise Value/Earnings Before Income, Taxes, Depreciation, and Amortization (EV/EBITDA) and close to a 30% normalized free cash flow yield.”
5. Ulta Beauty, Inc. (NASDAQ:ULTA)
Number of Hedge Fund Holders: 52
Ulta Beauty, Inc. (NASDAQ:ULTA) operates as a retailer of beauty products. Regulatory filings indicate that Bridgewater Associates owned over 1,000 shares of Ulta Beauty, Inc. at the end of June 2022 worth $439,000, representing a small portion of the portfolio.
On August 29, Barclays analyst Adrienne Yih maintained an Overweight rating on Ulta Beauty, Inc. stock and raised the price target to $511 foim $491, appreciating the second quarter earnings beat of the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Ulta Beauty, Inc., with 701,400 shares worth more than $270 million.
In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Ulta Beauty, Inc. was one of them. Here is what the fund said:
“After seeding the portfolio with select growth companies in the second half of 2020 and 2021, we have redirected our focus over the last several quarters to risk management. Moves during the second quarter in pursuit of greater stability included reducing consumer discretionary exposure with the sale of omni-channel cosmetics retailer Ulta Beauty, Inc..
We exited Ulta as our thesis has largely played out in terms of a post-COVID 19 earnings recovery. Ulta has steadily gained share over the last several years and its partnership with Target (TGT) represents a new avenue to gain customer loyalty. That being said, we are wary about the resilience of the consumer and the impact of labor cost inflation, which could crimp Ulta’s margin expansion in coming quarters. As with recent activity, the sale further reduces our consumer discretionary exposure and helps manage portfolio risk through an ongoing period of volatility.”
4. Redfin Corporation (NASDAQ:RDFN)
Number of Hedge Fund Holders: 19
Redfin Corporation (NASDAQ:RDFN) is a residential real estate brokerage firm. According to the latest data, Bridgewater Associates owned more than 516,000 shares of Redfin Corporation at the end of the second quarter of 2022 worth $4.2 million, representing 0.01% of the portfolio.
On August 8, Susquehanna analyst Shyam Patil maintained a Neutral rating on Redfin Corporation stock and lowered the price target to $10.5 from $13, noting the core business of the firm had executed pretty well given the current housing macro.
At the end of the second quarter of 2022, 19 hedge funds in the database of Insider Monkey held stakes worth $279 million in Redfin Corporation, compared to 23 the preceding quarter worth $565 million.
In its Q1 2022 investor letter, Saga Partners, an asset management firm, highlighted a few stocks and Redfin Corporation was one of them. Here is what the fund said:
“I recently wrote about Redfin in this December 2021 write-up. I explained how Redfin has increased the productivity of real estate agents by integrating its website with its full-time salaried agents and then funneling the demand aggregated on its website to agents. Redfin agents do not have to spend time prospecting for business but can rather spend all their time servicing clients throughout the process of buying and selling a home.
Since Redfin agents are three times more productive than a traditional agent, Redfin is a low-cost provider, i.e., it costs Redfin less to close a transaction than a traditional brokerage at scale. It is a similar concept as the higher operating leverage of e-commerce relative to brick & mortar retailers. Redfin has higher operating leverage compared to the traditional real estate brokerage.” (Click here to see the full text)
3. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 65
Sea Limited (NYSE:SE) is a diversified technology company. Securities filings reveal that Bridgewater Associates owned over 459,000 shares of Sea Limited at the end of June 2022 worth $30 million, representing 0.13% of the portfolio.
On August 18, Barclays analyst Jiong Shao maintained an Overweight rating on Sea Limited stock and lowered the price target to $114 from $125, noting that many macro factors had become more uncertain in recent months for the firm.
At the end of the second quarter of 2022, 65 hedge funds in the database of Insider Monkey held stakes worth $2.6 billion in Sea Limited, compared to 77 in the previous quarter worth $5 billion.
In its Q1 2022 investor letter, Farrer Wealth Advisors, an asset management firm, highlighted a few stocks and Sea Limited was one of them. Here is what the fund said:
“Sea Limited had been selling off since its peak in early November of ~$363/share. This was driven by both a general sell off in tech, especially non-profitable tech, and a general belief that its gaming arm (Garena) was experiencing a slowdown due to its flagship game Free Fire. Free Fire has experienced a slowdown for three reasons: it is a victim of its own success, and by the end of Q321, nearly 10% of the world’s population already played the game, and thus reaching new users was difficult; A return to normal with people traveling/going out more and spending less time playing games; and the Indian market imposed a ban on the game due to anti-Chinese sentiment (Tencent is a large shareholder in Sea Limited). We believed that these issues, while worth considering, were a bit overblown, and some of the data we saw from 3rd party sources showed that though Free Fire usage was dipping, it wasn’t too drastic. Thus, we marginally added to the position throughout the quarter. This was a mistake. During Sea’s earnings report in early March, the company guidance for Garena (down nearly 35% yoy) showed that the slowdown was far worse than predicted. Secondly, Shopee (Sea’s ecommerce arm) has pulled out of certain markets (in Europe and India), which long-term is probably the right strategy, but short-term hampers the optionality of the business. After considering this information and the guidance from earnings, we decided to significantly trim the position. In our opinion, management does have a bit of egg on its face from an overly aggressive expansion or as one investor called it, “bull market hubris.” We think management’s moves were mostly logical, it’s just that their failures came during an unforgiving market. While we believe that Sea’s future is still bright (especially with regards to their e-commerce and financial services), it will take a few quarters of strong earnings for them to regain their momentum, and for now the capital can be better spent elsewhere.”
2. BioNTech SE (NASDAQ:BNTX)
Number of Hedge Fund Holders: 26
BioNTech SE (NASDAQ:BNTX) is a biotech firm based in Germany. Latest filings show that Bridgewater Associates owned over 12,000 shares of BioNTech SE at the end of the second quarter of 2022 worth $1.8 million.
On August 17, Cowen analyst Yaron Werber initiated coverage of BioNTech SE stock with a Market Perform rating and a price target of $177, noting that the deep oncology pipeline of the firm was innovative but required validation.
At the end of the second quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes worth $380 million in BioNTech SE, compared to 29 the preceding quarter worth $409 million.
In its Q3 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and BioNTech SE was one of them. Here is what the fund said:
“BioNTech SE is a leader in the emerging field of mRNA drugs, with additional programs in engineered cell therapies, antibodies, and immunomodulators. Shares performed well for the quarter. The COVID-19 vaccine rollout continues with the addition of a booster shot, and we believe the pandemic has been a strong proof point of the speed and efficacy of the mRNA platform. Beyond vaccines, we think BioNTech SE has potential to disrupt the biopharmaceutical space with a pipeline spanning oncology, infectious diseases, and rare diseases.”
1. Sabre Corporation (NASDAQ:SABR)
Number of Hedge Fund Holders: 38
Sabre Corporation (NASDAQ:SABR) provides technology solutions for the travel industry. Latest data shows that Bridgewater Associates owned over 22,000 shares of Sabre Corporation at the end of the second quarter of 2022 worth $130,000, representing a small portion of the portfolio.
On August 22, Mizuho analyst Matthew Broome maintained a Neutral rating on Sabre Corporation stock and raised the price target to $8 from $7, noting the firm continued to see positive trends across the global travel recovery.
At the end of the second quarter of 2022, 38 hedge funds in the database of Insider Monkey held stakes worth $434 million in Sabre Corporation, the same as in the preceding quarter worth $845 million.
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This article is originally published at Insider Monkey.
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