Here Are The Major Moves Made By Bridgewater Associates Going Into 2017

2016 was again a dismal year for the hedge fund industry, with a lot of hedge funds failing to beat the benchmark and some trailing it by a huge margin. Among the funds that performed well last year, most of them are tried and tested titans of the industry with a track record spanning decades. According to a research report published by LCH Investments NV, Bridgewater Associates – which leads the list of the 140 Biggest and Most Famous Activist Hedge Funds in the world in terms of assets under management – managed to beat all of its competitors in absolute terms by earning $4.9 billion for its clients in 2016.

Founded by billionaire Ray Dalio in 1975, Bridgewater is an investment behemoth with over 1,500 employees and $212.28 billion in regulatory assets under management as of August 23, 2016. The mega-hedge fund recently submitted its 13F filing for the quarter ending December 31. According to the filing, Bridgewater’s U.S equity portfolio was worth $10.528 billion at the end of 2016 and its top-10 stock picks amassed over 80% of the value of its portfolio. In this article we’ll take a look at five major moves the fund made during the October-December period and will discuss how those stocks have been performing recently.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 39.7%, topping the 24.1% gain registered by S&P 500 ETFs. Insider Monkey’s enhanced small-cap strategy registered gains of more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points in the last 4.5 years (see the details here).

Companies in Which Bridgewater Associates Sold Off its Entire Stake During Q4

Bristol-Myers Squibb Co (NYSE:BMY)

Bristol-Myers Squibb Co (NYSE:BMY) had been a part of Bridgewater’s portfolio since the third quarter of 2015, with the fund holding 390,577 shares of the company at the end of last September. Bristol-Myers Squibb Co (NYSE:BMY)’s stock ended the fourth quarter up by 8.38%. However, it has given back all of those gains in 2017 and is currently trading down by 8.09% year-to-date. At present, Bristol-Myers pays a quarterly dividend of $0.39 per share, which translates into a forward yield of 2.90%. On February 14, StreetInsider reported that Bristol-Myers could be a potential takeover target of three major pharma companies – Roche Holdings, Novartis (NYSE:NVS) and Pfizer (NYSE:PFE). Additionally, the report also mentioned that Gilead Sciences (NASDAQ:GILD) could be a potential buyer.

Rogers Communications Inc. (USA) (NYSE:RCI)

Considering that Rogers Communications Inc. (USA) (NYSE:RCI) is currently trading up by over 11% year-to-date and has managed to recoup all the losses it suffered during the fourth quarter, it seems Bridgewater made a mistake by selling its holding in the company during the fourth quarter. Rogers Communications Inc. (USA) (NYSE:RCI) had been a part of Bridgewater’s portfolio from the fourth quarter of 2014 through the fourth quarter of 2016, a period in which its stock went nowhere. However, the fund would have made some money from the quarterly dividend the company pays, which at present stands at $0.37 per share and translates into an attractive annual dividend yield of 3.42%. On January 27, analysts at Canaccord Genuity upgraded the stock to ‘Buy’ from ‘Hold’.

We’ll check out three other moves made by Bridgewater Associates during Q4 on the next page.

Other Moves Made By Bridgewater Associates During Q4

Molson Coors Brewing Co (NYSE:TAP)

– Shares Held By Bridgewater Associates (as of December 31): 284,700

– Value of Holding (as of December 31): $27.70 Million

With Bridgewater Associates hiking its stake in Molson Coors Brewing Co (NYSE:TAP) by over 9,000% during the fourth quarter, the position jumped from being a miniscule one to being the 13th-largest holding of the fund at the end of 2016. Molson Coors Brewing Co (NYSE:TAP)’s stock underwent a 10% correction during the October-December period and has mostly been range-bound this year. On February 14, the company reported its fourth quarter results, declaring EPS of $0.46 on revenue of $2.47 billion versus analysts’ estimates of $0.87 in EPS on revenue of $2.57 billion. Last month, analysts at Credit Suisse initiated coverage on Molson Coors’ stock with a ‘Neutral’ rating and $106 price target.

Intel Corporation (NASDAQ:INTC)

– Shares Held By Bridgewater Associates (as of December 31): 17,482

– Value of Holding (as of December 31): $13.49 Million

Moving on, Intel Corporation (NASDAQ:INTC) dropped to 11th in Bridgewater Associates’ 13F portfolio as of the end of December, down from seventh spot at the end of September, owing largely to the fund lowering its stake in the company by 37% during the fourth quarter. Shares of the tech major have performed well in the last year, generating a return of over 25%. However, the company has been struggling to compete with other semiconductor firms over the last few years. Citing that as one of the major reasons, Canaccord Genuity analyst Matthew Ramsay downgraded Intel Corporation (NASDAQ:INTC) to ‘Hold’ from ‘Buy’ on February 10, and also lowered his price target on it to $38 from $43, suggesting potential upside of only 5.7%.

Apple Inc. (NASDAQ:AAPL)

– Shares Held By Bridgewater Associates (as of December 31): 416,500

– Value of Holding (as of December 31): $48.24 Million

In what could be deemed as the right move at the right time, Bridgewater Associates upped its holding in Apple Inc. (NASDAQ:AAPL) by 20% during the fourth quarter. Since the end of that period, Apple Inc. (NASDAQ:AAPL)’s stock has appreciated by 16.58% and is currently trading at its lifetime high. However, Bridgewater won’t be alone in capitalizing on the recent gains from the tech behemoth. Another titan from the hedge fund industry, Warren Buffett‘s Berkshire Hathaway, upped its stake in Apple by a whopping 276% to 57.36 million shares during the October-December period. Earlier this week, UBS analyst Steve Milunovich released a note in which he reiterated  his ‘Buy’ rating  and $138 price target on Apple’s stock. In his note, Mr. Milunovich wrote:

“Management has emphasized the importance of services the past year. We consider the installed base and retention rate the primary drivers of device and services value. We also view Apple as a platform vendor with hardware and services intertwined. However, to test the notion that the market underappreciates services, we performed a sum-of-the-parts analysis. If Apple services were valued similarly to PayPal, the stock would be at least 10% higher.”

Disclosure: None