In this article, we discuss the 10 tech stocks that billionaire Ray Dalio is selling.
Ray Dalio, the chief of Bridgewater Associates, is one of the biggest Chinese bulls on the stock market. Dalio manages an equity portfolio at his hedge fund that was worth more than $23 billion at the end of the second quarter of 2022. In late November last year, Dalio raised more than $1.2 billion for an investment fund in China backed by Bridgewater, beating out rivals like BlackRock to the punch. Bridgewater also became one of the largest American money managers in the country as a result of this fund-raising.
However, it seems that as the Chinese economy has slowed down in recent months, largely due to a prolonged trade war with the United States, the supply chain issues resulting from the pandemic, and a domestic real estate crash that is threatening a recession, Dalio is walking back on his bullish Chinese sentiments. His bearish outlook extends to the tech sector in general, where he has been shedding risky firms from his portfolio in anticipation of a global slowdown in the finance world.
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). During the second quarter, the value of the equity portfolio of Bridgewater decreased by around $1 billion. In this period, Dalio made new purchases in 116 stocks, sold out of 99, reduced holdings in 256, and made additional purchases in 612 stocks. The top ten holdings comprise over 29% of the overall portfolio.
Our Methodology
These were picked according to the investment portfolio of Bridgewater Associates at the end of the second quarter of 2022. Only stocks that were sold off completely in the second quarter, 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.
Ray Dalio of Bridgewater Associates
Billionaire Ray Dalio Is Selling These Tech Stocks
10. DiDi Global Inc. (NYSE:DIDI)
Number of Hedge Fund Holders: 2
DiDi Global Inc. (NYSE:DIDI) is a Chinese mobility technology platform. In late July, the company was fined $1.2 billion by the cybersecurity regulator in China. The probe into the firm had begun almost a year ago after the company listed in New York amid scrutiny from Beijing. The fines were related to breaking laws concerning cybersecurity, data security, and personal information protection, per Chinese authorities. The fine is around 4% of the annual revenues of the company, as per 2021 figures.
In early June, DiDi Global Inc. announced that it was considering buying the electric-vehicle unit of Sinomach Automobile, a state-backed firm in China. The purchase would cost the firm in excess of $150 million.
At the end of the second quarter of 2022, 2 hedge funds in the database of Insider Monkey held stakes worth $6 million in DiDi Global Inc., compared to 15 in the preceding quarter worth $30 million.
Just like Walmart Inc., The Coca-Cola Company, and The Procter & Gamble Company, DiDi Global Inc. is one of the stocks feeling the heat of an economic slowdown.
In its Q1 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and DiDi Global Inc. was one of them. Here is what the fund said:
“DiDi Global Inc. (the so-called Chinese Uber) recently announced that on May 23 it will vote at an Extraordinary General Shareholders’ Meeting on whether the company will continue to be listed on the U.S. stock exchange. In addition, it communicated that, although it is considering alternatives, it has no plans to list on other markets before its shares are delisted in the United States. Investor reaction was swift, with the company’s share price tanking by around 20% in a single day.
In the case of Didi Global, the accusation by the Cyberspace Administration of China that its IPO was conducted without completing a state data security audit is having an even greater impact. This has led to significant pressure from the government, cancelling many of the company’s mobile apps and hurting its business. All in all, Didi Global has collapsed by 87% since its IPO just under a year ago. Although some media commented that Didi Global would possibly recover these apps once it was delisted in the United States, it seems that the Chinese government is not very happy with the fines that were agreed between the company and the CAC, which may explain the delay in its potential listing on the Hong Kong Stock Exchange. This is certainly a clear indication of the extent to which China is willing to preserve certain information from the scrutiny of the United States.”
9. Bilibili Inc. (NASDAQ:BILI)
Number of Hedge Fund Holders: 25
Bilibili Inc. (NASDAQ:BILI) provides online entertainment services. The stock has jumped in recent weeks after reports suggest that the US government has reached an agreement with Chinese authorities with regards to auditing. The US government had earlier asked Chinese firms listed in the US to comply with independent audits, sending the shares of Chinese firms nose-diving since it was assumed that Beijing would not allow such measures. A slowdown in the Chinese economy had also hurt Chinese stocks in the US.
In early August, Goldman Sachs analyst Lincoln Kong maintained a Neutral rating on Bilibili Inc. stock, noting that the firm had received an approval from the Chinese government for the monetization of a promising online game.
At the end of the second quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes worth $491 million in Bilibili Inc., compared to 24 in the preceding quarter worth $468 million.
8. Guidewire Software, Inc. (NYSE:GWRE)
Number of Hedge Fund Holders: 28
Guidewire Software, Inc. (NYSE:GWRE) provides software products for the insurance industry. In early June, the firm posted earnings for the third fiscal quarter, reporting losses per share of $0.26, beating market estimates by $0.02. The revenue over the period was $197 million, up more than 20% compared to the revenue over the same period last year and beating estimates by $9.7 million. The firm also revealed that annual recurring revenue was $637 million as of April 30, compared to $582 million as of July 2021.
On August 30, DA Davidson analyst Peter Heckmann maintained a Buy rating on Guidewire Software, Inc. stock and lowered the price target to $96 from $114, backing the firm to beat market estimates on earnings in the next few months.
Among the hedge funds being tracked by Insider Monkey, California-based investment firm Stockbridge Partners is a leading shareholder in Guidewire Software, Inc., with 4.9 million shares worth more than $348 million.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Guidewire Software, Inc. was one of them. Here is what the fund said:
“Guidewire Software, Inc., the leader in P&C insurance core systems software, reported outstanding financial results in June that included record new deal activity and 49% growth in its core recurring subscription revenue line. Guidewire has invested heavily to transition its software to be delivered in the cloud and is now benefiting from a virtuous cycle of customer adoption.”
7. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 60
Shopify Inc. (NYSE:SHOP) provides a commerce platform and related services. Bridgewater sold off the entire stake it had in the firm during the second quarter of 2022.
At the end of the second quarter of 2022, 60 hedge funds in the database of Insider Monkey held stakes worth $3.2 billion in Shopify Inc., compared to 72 in the preceding quarter worth $5.7 billion.
In its Q1 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Shopify Inc. was one of them. Here is what the fund said:
“We added to the Portfolio’s position in e-commerce company Shopify Inc. in the first quarter after a sharp share-price decline. This brought the Portfolio’s weighting in the company to 2%. We believe Shopify provides a uniquely positioned platform, and we like the company’s strategy of continuing to invest in its business in an effort to strengthen its competitive advantages. The market’s affinity for businesses like Shopify Inc. may have changed, which created an opportunity for us to build our position in the company at what we believed to be compelling valuations.”
6. Honeywell International Inc (NASDAQ:HON)
Number of Hedge Fund Holders: 42
Honeywell International Inc. (NASDAQ:HON) is a diversified technology and manufacturing company. The company has an impressive dividend history stretching back close to two decades. It has paid a consistent dividend to shareholders for the last nineteen years. Over the past eleven years, this payout has registered consistent growth as well, in a sector where the median in this regard is just two years. In late July, the firm declared a quarterly dividend of $0.98 per share, in line with previous. The forward yield was 2.05%.
On July 29, JPMorgan analyst Stephen Tusa maintained an Overweight rating on Honeywell International Inc. and raised the price target to $190 from $180, appreciating the second quarter earnings beat of the firm.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Honeywell International Inc., with 1.2 million shares worth more than $220 million.
In addition to Walmart Inc., The Coca-Cola Company, and The Procter & Gamble Company, Honeywell International Inc. is one of the stocks that elite investors are monitoring.
5. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 61
Analog Devices, Inc. (NASDAQ:ADI) makes and sells semiconductors and is headquartered in Massachusetts. Even though the stock has climbed since the US government approved the CHIPS Act last month, promising billions in government spending on the semiconductor sector, recent reports suggest that Washington has also asked chipmakers in the US to halt the sales of select products to the Chinese and Russians, hurting firms which trade with manufacturing hubs in both countries.
On August 18,Deutsche Bank analyst Ross Seymore maintained a Hold rating on Analog Devices, Inc. stock and raised the price target to $170 from $165, appreciating the earnings beat of the firm in the second quarter.
At the end of the second quarter of 2022, 61 hedge funds in the database of Insider Monkey held stakes worth $4.2 billion in Analog Devices, Inc., compared to 67 the preceding quarter worth $4.8 billion.
4. JD.com, Inc. (NASDAQ:JD)
Number of Hedge Fund Holders: 62
JD.com, Inc. (NASDAQ:JD) owns and operates an ecommerce platform. On August 23, the firm posted earnings for the second fiscal quarter, reporting earnings per share of $0.61, beating market estimates by $0.20. The revenue over the period was $40 billion, up close to 5.4% compared to the revenue over the same period last year and beating estimates by $1.4 billion. The firm also revealed that annual active customer accounts increased by 9.2% to 580 million in the twelve months ended June 30, compared to 531 million in the previous year.
On August 24, Benchmark analyst Fawne Jiang maintained a Buy rating on JD.com, Inc. stock and raised the price target to $109 from $106, noting that the drivers for the margin improvement of the firm looked sustainable.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management is a leading shareholder in JD.com, Inc., with 30 million shares worth more than $1.9 billion.
In its Q3 2021 investor letter, Argosy Investors, an asset management firm, highlighted a few stocks and JD.com, Inc. was one of them. Here is what the fund said:
“We sold JD.com, Inc. 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.”
3. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 66
Broadcom Inc. (NASDAQ:AVGO) supplies semiconductor infrastructure software solutions. The company has an impressive dividend history stretching back close to a decade. It has paid a consistent dividend to shareholders for the last ten years. Over the past decade, this payout has registered consistent growth as well, in a sector where the median in this regard is just two years. In early September, the firm declared a quarterly dividend of $4.10 per share, in line with previous. The forward yield was 3.34%.
On September 2, Truist analyst William Stein maintained a Buy rating on Broadcom Inc. stock and lowered the price target to $630 from $658, appreciating the earnings beat and guidance numbers of the firm in the second quarter.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Cantillon Capital Management is a leading shareholder in Broadcom Inc., with 1 million shares worth more than $500 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Broadcom Inc. was one of them. Here is what the fund said:
“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 Inc. 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 Inc. 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.”
2. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 75
Intuit Inc. (NASDAQ:INTU) provides financial management and compliance products. On August 23, the firm posted earnings for the fourth fiscal quarter, reporting earnings per share of $1.10, beating market estimates by $0.12. The revenue over the period was $2.4 billion, down close to 5.9% compared to the revenue over the same period last year and beating estimates by $80 million. The firm also revealed that it expected revenue growth of approximately 23% to 25% in the first quarter of 2023.
On September 1, Citi analyst Steven Enders initiated coverage of Intuit Inc. stock with a Buy rating and a price target of $538, noting that the firm remains one of the best execution stories in large-cap software.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in Intuit Inc., with 2.3 million shares worth more than $914 million.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Intuit Inc. was one of them. Here is what the fund said:
“At the company-specific level, with 59% of our holdings posting double-digit declines during the quarter, we had no chance to hold up against the Index that was down less than 5%. The good news is that for the most part, this draw-down did not result in a permanent loss of capital and in many cases, we believe fundamentals have remained robust or improved even though stock prices declined. One example is Intuit, the leading provider of accounting software, and our second largest detractor in the quarter. The stock lost 25% of its value (or over $45 billion) due to a miss in quarterly revenues, which was driven by a slower start to the tax season, leading the company to miss consensus estimates for consumer revenues by about $190 million. The slower start to the tax season is of course insignificant to the intrinsic value of the business, as everyone knows there are only two certainties in life and one of them is – TAXES! And so, naturally, Intuit reaffirmed its annual projections. Moreover, results in other segments were ahead of expectations. CEO Sasan Goodarzi explained the outperformance during its quarterly conference call by saying:
‘We have a nearly $300 billion addressable market driven by tailwinds that include a shift to virtual solutions, an acceleration to online and omni-channel capabilities, and digital money offerings. This, combined with the team’s excellence and execution is contributing to the strength of our performance.’
More specifically, Intuit is gaining market share in tax filings (“we are on track to gain share overall again this season”), continues expanding its QuickBooks online offering, which was up 35% year-over-year, and is seeing strong synergies from its Credit Karma acquisition, driven by Intuit’s Lightbox technology, which allows better personalization of offerings to customers (for example, it “doubles the average approval rate for members who apply for credit cards on Credit Karma versus outside of Credit Karma”). The bottom line is that our estimates of Intuit’s intrinsic value were up while the stock price was down and therefore our future expected return has increased.”
1. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 106
Alibaba Group Holding Limited (NYSE:BABA) is a diversified technology company. On August 30, news agency Reuters reported that Alibaba was among a host of Chinese firms that would receive audit inspections in the coming months. The reports emerged merely days after US and Chinese authorities agreed upon a preliminary deal that would see a third party gain access to the books of Chinese firms listed on US exchanges. The body in question is the Public Company Accounting Oversight Board.
On August 8, Deutsche Bank analyst Leo Chiang maintained a Buy rating on Alibaba Group Holding Limited stock and raised the price target to $160 from $155, noting that the present valuation of the firm was defensive.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited, with 14.4 million shares worth more than $1.6 billion.
In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited was one of them. Here is what the fund said:
“We have eliminated 6 holdings during the first quarter (including) Alibaba Group Holding Limited. We have sold our Alibaba Group Holding Limited position as the company continues to face competitive challenges and regulatory pressures remain, making it difficult (if not impossible) to appropriately assess the range of outcomes and associated probabilities for the future profitability of the business.”
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This article is originally published at Insider Monkey.
