In the article, we will discuss 5 stocks to sell according to Ray Dalio. To read the detailed analysis of Ray Dalio’s Bridgewater Associates, go directly to 10 Stocks to Sell Now According to Ray Dalio.
5. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 61
Analog Devices, Inc. (NASDAQ:ADI) is a Washington-based semiconductor company. Bridgewater Associates added the company to its portfolio in Q1 2022 and sold it soon after. In Q1 2022, the firm held stakes worth $21.3 million in Analog Devices, Inc. (NASDAQ:ADI), representing 0.08% of the firm’s portfolio. Bridgewater Associates dumped its Analog Devices, Inc. (NASDAQ:ADI) position entirely in the second quarter of 2022.
In Q2 2022, Analog Devices, Inc. (NASDAQ:ADI) recorded an EPS of $2.52, exceeding the estimates by $0.09, and the revenue of $3.11 billion was up 76.7% on a YoY basis, beating estimates by $50 million. Moreover, the company paid out $1.3 billion to its shareholders during the quarter in the form of share repurchases worth $906 million and $394 million in dividends.
On August 18, Needham analyst Quinn Bolton downgraded Analog Devices, Inc. (NASDAQ:ADI) from Buy to Hold after its earning reports. The analyst added that Analog Devices, Inc. (NASDAQ:ADI) and the semiconductor industry are on their way to a broader slowdown.
Here is what Madison Funds had to say about Analog Devices, Inc. in its Q3 2021 investor letter:
“At its 2017 investor day, Analog Device’s VP of Automotive, Mark Gill, described how the company’s content on well-equipped electric vehicles was $600 per car compared to $250 per car for the traditional 2017 internal combustion engine car. Since then, Analog has highlighted the success of its EV battery management systems (BMS) product nearly every quarter. The BMS product is hardware and software that manages the power into and out of the battery systems. It’s the brains of the operation. Analog says it’s on its fifth generation BMS product, that it has the no. 1 market share in high voltage products, and that it is on 5 of the top 10 selling EVs. While we think that the BMS product is just 1 to 1.5% of Analog’s product mix, we think that it could add nearly a point of revenue growth per year to the company’s top-line given the expected ramp in EV production. This is a material amount of growth atop an already nicely growing company revenue line.”
4. Accenture plc (NYSE:ACN)
Number of Hedge Fund Holders: 61
Accenture plc (NYSE:ACN) is an Irish-American information technology and consulting company. At the end of Q1 2022, the company had a 0.28% concentration in Bridgewater Associates’ portfolio, with 211,086 shares worth $71.18 million. However, the firm sold its stake in the June quarter.
As of August 23, Accenture plc (NYSE:ACN) has a dividend yield of 1.23%, with an annualized dividend payout of $3.88. The most recent quarterly dividend was $0.97 per share, paid to shareholders on August 15.
On August 9, Baird analyst David Koning maintained a Neutral rating on Accenture plc (NYSE:ACN) and raised his price target to $338 from $310. The analyst believes that its recent acquisition of Romp could increase its annualized revenue and views its risk/reward as decent, owing to solid growth, high-quality earnings, and a clean balance sheet.
Here is what Polen Capital had to say about Accenture plc (NYSE:ACN) in its Q1 2022 investor letter:
“Accenture’s business is firing on all cylinders and continue to enjoy an acceleration in their respective fundamentals because of the increase in digitization around the world. Nearly every company today is searching for ways to become more digital, and Accenture is positioned to provide many of the solutions these companies seek. This inflection in fundamentals was not lost on the market, and each business’s stock performed exceptionally well in 2021. In fact, they represented two of the three top absolute performers for the Global Growth Portfolio last year. As a result, its stock is currently more fully priced. As such, we lowered Accenture to an average weight. We maintain high conviction in the business and plan to own it for many years, but recognize the increase in their prices.”
3. JD.com, Inc. (NASDAQ:JD)
Number of Hedge Fund Holders: 62
JD.com, Inc. (NASDAQ:JD) is a Chinese e-commerce company and a member of the Fortune Global 500. The company possesses some of the best drone delivery systems, infrastructure, and capabilities.
According to its second quarter reports, JD.com, Inc. (NASDAQ:JD) reported an EPS of $0.61 against the $0.40 consensus. The revenue of $40 billion represented a 5.4% YoY growth and outperformed the estimates of $38.47 billion. Furthermore, the company reported that its annual active customers increased to 580.8 million, an increase of 9% in 12 months. The company is also focusing on its shareholder returns through its $1.26 annual dividend and the $3 billion share repurchase program which will last till May 2024.
In Q1 2022, Bridgewater Associates had a $123.91 million stake in JD.com, Inc. (NASDAQ:JD), representing 0.49% of the fund’s portfolio. The stock was dumped by the firm during the quarter ending June 30.
On July 25, Morgan Stanley analyst Eddy Wang named JD.com, Inc. (NASDAQ:JD) a “Catalyst Driven Idea” ahead of its Q2 earnings and believes that the company’s Q3 revenue growth will accelerate from June levels. Wang has an Overweight rating on JD.com, Inc. (NASDAQ:JD) with an $80 price target.
Here is what Argosy Investors had to say about JD.com, Inc. (NASDAQ:JD) in its Q3 2021 investor letter:
“We sold JD as a result of the furor over Chinese stocks during the quarter. We had been concerned about China’s lack of respect for investor rights for some time, and Beijing has become significantly more aggressive in asserting itself of late. In addition, the legal structure Chinese companies use to come public in the U.S., a Cayman Islands shell corporation leaves American investors with an unsure path to recovering value should these companies cease to trade on U.S. exchanges. Because of the uncertainty, we exited our position in JD completely. We still love JD’s long-term prospects, but we cannot estimate the legal/regulatory risk associated with these companies anymore. More broadly, we are freeing up cash for some other positions we already own which have declined in this market, and after additional review, remain attractive.”
2. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 66
Broadcom Inc. (NASDAQ:AVGO) is an American semiconductor and computer software company. On August, 12 BofA removed the company from its US 1 list, yet maintained a Buy rating on the company shares.
In May 2022, Broadcom Inc. (NASDAQ:AVGO) announced its acquisition of VMware, Inc. (NYSE:VMW) for $61 billion in cash and stock. The acquisition is expected to provide Broadcom Inc. (NASDAQ:AVGO) with an additional $13 billion in annual revenue, $1.6 billion in annual net income, and $4 billion in annual operating cash flow. The deal is expected to close in 2023 as it still needs regulatory approval.
Bridgewater associates owned 19,229 shares of Broadcom Inc. (NASDAQ:AVGO), valued at $12.1 million at the end of Q1 2022, representing 0.04% of the fund’s portfolio. In Q2 2022, the firm dumped the stock entirely.
On July 20, Deutsche Bank analyst Ross Seymore reaffirmed a Buy rating for Broadcom Inc. (NASDAQ:AVGO) shares with a price target of $635, down from $700. The analyst expects a positive fundamental strength across the majority of the sector. However, he believes that investors are waiting for a “widespread deck-clearing” before looking back at semiconductor stocks.
Here is what ClearBridge Investments had to say about Broadcom Inc. (NASDAQ:AVGO) in its Q4 2021 investor letter:
“However, ClearBridge portfolio companies are responding by supporting their workforces and showing resilience in adapting and thriving. Semiconductor companies ClearBridge owns and engages with have been successful in advancing vaccinations in their global supply chains. In Malaysia, for example, Broadcom has taken part in PIKAS, a public-private partnership vaccination program focusing on the workforce in critical manufacturing sectors. By the summer of 2021, Broadcom was able to get over 90% of workers in its Penang factory at least one dose of vaccine, and roughly 73% fully vaccinated. Companies in the program also pay the administration cost for vaccinations including cases where the employee is no longer employed by the company before full immunization of the employee.”
1. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 106
Alibaba Group Holding Limited (NYSE:BABA) is China’s largest e-commerce corporation. The company provides consumer-to-business, business-to-consumer, and business-to-business sales services.
Alibaba Group Holding Limited (NYSE:BABA) faced a number of headwinds in recent times. Firstly, the presence of China’s military in Chinese waters raised tensions between USA and China. Additionally, the re-emergence of COVID led to a lockdown in major Chinese cities. Resultantly, Alibaba Group Holding Limited (NYSE:BABA) saw a drop of 1% YoY in the e-commerce segment to 141.94 CNY in Q2 2022 from 144.03 billion CNY in the same quarter of 2021. Moreover, the cloud computing business saw a 10% YoY increase compared to 29% in Q2 2021.
In Q1 2022, Bridgewater Associates held 7.48 million shares of Alibaba Group Holding Limited (NYSE:BABA), valued at $813.88 million, representing 3.28% of the fund’s portfolio. Dalio sold the entirety of his position in the company in Q2.
Here is what Artisan Partners had to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q2 2022 investor letter:
“Alibaba rose 4% during the quarter. We would love to say the share price performance was due to strong operational performance. Unfortunately, that was not the case. The most recent earnings results showed its core e-business still had not returned to growth, primarily due to the difficult retail environment caused by the government’s zero-COVID policy. Alibaba also appears to be losing market share due to its product mix tilted toward apparel and cosmetics, categories currently stalled in this environment. The share price performance this quarter was largely a function of exogenous items—specifically, government actions in the form of stimulus to support the economy and less regulations.
Despite the poor recent results, Alibaba remains a powerful economic engine. It is a global leader in e-commerce and cloud computing, both of which should grow nicely over time. Management has started taking actions to improve profitability, which has been burdened by significant investment in loss-making business ventures. The financial results should improve significantly when China’s economy starts to recover from COVID-19 outbreaks. The shares are incredibly cheap and have some of the highest upside potential in the portfolio. Even embedding significant losses from new ventures, we estimate they are trading at 11X-12X unlevered earnings. In our view, the shares could double, and they still would not be expensive.”
You can also take a look at 10 Stocks Analysts Are Downgrading After Weak Earnings Reports and 10 Stocks That the Russia-Ukraine War Will Affect in the Future.
