Billionaire Ray Dalio’s Top Stock Picks for 2016

#3 Microsoft Corporation (NASDAQ:MSFT)

– Shares Owned by Bridgewater Associates (as of December 31): 538,008

– Value of Holding (as of December 31): $29.85 million

Moving on, Bridgewater Associates added 67,000 more shares of Microsoft Corporation (NASDAQ:MSFT) to its equity portfolio during the December quarter. After rallying by over 20% during the fourth quarter, shares of the software giant have declined by 7.91% so far this year. However, they are still trading comfortably above the $50 mark and boast an annual dividend yield nearing 3%. Analysts covering the stock are happy that the company has been actively reducing its exposure to the mobile hardware market and focusing more on the software side. Over the past 14 months, Microsoft Corporation (NASDAQ:MSFT) has made four large acquisitions in the app space, the most recent being SwiftKey, a third-party keyboard app. The stock currently has an average rating of ‘Overweight’ from 35 analysts, with an average price target of $58.95, suggesting upside potential of over 10%. Stephen Mandel‘s Lone Pine Capital also increased its stake in Microsoft Corporation during the fourth quarter, by 7% to 27.26 million shares.

#2 Bed Bath & Beyond Inc. (NASDAQ:BBBY)

– Shares Owned by Bridgewater Associates (as of December 31): 647,054

– Value of Holding (as of December 31): $31.22 million

Shares of Bed Bath & Beyond Inc. (NASDAQ:BBBY) have been on a consistent decline over the past year, losing 42.7% of their value. However, rather than get apprehensive, Bridgewater Associates has been taking full advantage of the opportunity. After increasing its stake in the company by 250% during the third quarter, the fund again increased its stake during the fourth quarter, by 96%. Following the consistent decline, Bed Bath & Beyond Inc. (NASDAQ:BBBY) now trades at a trailing price-to-earnings multiple of 8.82, almost 40% lower than the 15.34 average multiple that the industry trades at. The company is facing increasing competition from e-retailers, resulting in its store traffic declining significantly during the past few quarters, which has led many investors to dump their holdings in the stock. Analysts fear that if Bed Bath & Beyond Inc. isn’t able to do something over the next few quarters, it will find it very hard to regain its lost market share.

#1 Apple Inc. (NASDAQ:AAPL)

– Shares Owned by Bridgewater Associates (as of December 31): 327,452

– Value of Holding (as of December 31): $34.47 million

Bridgewater Associates increased its stake in Apple Inc. (NASDAQ:AAPL) by 19% during the fourth quarter, moving it to the top spot among Dalio’s long stock picks at the end of December. The company has lost almost 25% of its market capitalization in the past year, but technical analysts feel that it will be hard for it to fall further because it has considerable support at the $90 levels. Fundamental analysts seem to share the same views on it as technical analysts, but for a different reason. According to them, if the greater than $200 billion in cash that the company has on its balance sheet is discounted from its market capitalization, Apple Inc. (NASDAQ:AAPL) is currently trading at a forward price-to-earnings multiple of below 7.0, which is absurdly low for any company, especially a tech company.  However, a majority of investors are still wary of buying the stock, their primary reason being the expected decline in the core business of the company. After many quarters of keeping its stake unchanged, activist investor Carl Icahn of Icahn Capital LP reduced his stake in Apple Inc. by 7% to 45.76 million shares during the fourth quarter.

Disclosure: None