We recently compiled a list of the Best Stocks to Buy According to Billionaire Ray Dalio. In this article, we will look at where Johnson & Johnson (NYSE:JNJ) ranks among the best stocks to buy according to billionaire Ray Dalio.
Ray Dalio was born in 1949 and graduated from Long Island University in 1971. After a brief stint as a clerk on the New York Stock Exchange, he attended Harvard Business School and earned his MBA in 1973. That same year, he became the Director of Commodities at Dominick & Dominick LLC and later traded futures at Shearson Hayden Stone for a year. Dalio founded Bridgewater Associates in 1973 in his apartment. In July 2011, he stepped down as CEO but continued to work as a co-CIO alongside Robert Prince and Greg Jensen, taking on the title of “Mentor.”
Bridgewater Associates is notable for its focus on transparency and accountability. The firm promotes a culture where team members take responsibility for mistakes and learn from them. It encourages questioning and alignment, ensuring everyone regularly evaluates the validity of their ideas. This approach is crucial to the firm’s management style and investment strategies.
Ray Dalio Warns of U.S. Decline
Ray Dalio, founder of Bridgewater Associates, emphasized that since 1945, the United States has been the dominant global empire, but it is now in a state of relative decline. This decline isn’t just an opinion, it’s supported by concrete measures such as the nation’s share of global GDP, military strength, and the quality of its education system. These factors indicate that the U.S. is losing its position.
In addition to these, Dalio points out two other key elements that often disrupt world order: natural events like droughts, floods, and pandemics, which have historically caused more damage and upheaval than wars, and human creativity and technological innovation, which bring about substantial changes. Dalio believes all five factors are influencing the U.S. today. However, he stresses that the most critical issue is how people manage these challenges together.
The ability to address them intelligently and without creating further conflict is essential. If conflict arises, it could lead to a devastating outcome. But if people can come together and handle the situation effectively, the country can navigate these issues successfully. For Dalio, how society deals with one another is the number one factor in determining the future.
China Faces Economic Challenges and Urgent Need for Restructuring After Four Years of Change
In a recent Bloomberg interview, Ray Dalio also highlighted significant issues in China that have emerged over the past four years. He explained that China is in need of a major restructuring, as a large portion of individual spending, around 70%, was invested in real estate. With the decline in real estate, stocks, and salaries, people have become more cautious, reducing their spending and holding onto cash. In a deflationary environment, cash has become a relatively safe asset. This situation is affecting both households and businesses.
Dalio also pointed out that the government sector is facing serious challenges. Local governments, responsible for 83% of public spending, previously relied on land sales to generate revenue. With land sales drying up, these governments have accumulated significant debt, and now they’re struggling to pay it off. The key question is how to inject money into these local economies to keep them functioning. Dalio compared the situation to Japan’s struggles in 1990, noting that China’s challenges are even more severe and will require deep restructuring to resolve.
In addition to economic concerns, Dalio raised questions about property ownership and values. He referenced Deng Xiaoping’s famous statement, “It’s glorious to be rich,” and wondered if that sentiment still holds true in China today. The overall environment in the country is becoming more complex and difficult, as these economic and political issues intensify.
Dalio also emphasized the importance of being cautious when investing in China. He made it clear that every country goes through economic cycles, experiencing both highs and lows. According to Dalio, it’s crucial not to invest too heavily in any one country, including China, to avoid having it dominate your portfolio. Despite the challenges China faces, Dalio continues to invest there, but he stressed that the key consideration is the size and structure of the investment. Overall, his experience investing in China has been positive, though careful management is essential.
Our Methodology
We sifted through Bridgewater Associates’ Q2 2024 13F portfolio and picked the top 10 stocks held by the fund. We also added the total number of hedge fund investors per company, as of Q2 2024. The stocks are ranked in ascending order of Bridgewater Associates’ stake in them.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Johnson & Johnson (NYSE:JNJ)
Total Number of Shares Owned: 3,204,305
Total Value of Shares Owned: $468,341,219
Number of Hedge Fund Investors: 80
Johnson & Johnson (NYSE:JNJ) ranks 7th in our list of the 10 best stocks to buy according to billionaire Ray Dalio. In Q2 2024, Johnson & Johnson (NYSE:JNJ) reported revenues of $21.1 billion, a 6% increase from last year, with net income at $5.2 billion. This growth was primarily driven by solid performance in its pharmaceuticals and medical devices divisions, which have remained resilient despite market challenges.
A major factor in Johnson & Johnson (NYSE:JNJ)’s success is its strong pipeline of innovative products, especially in immunology and oncology, with a recent approval for a new cancer treatment expected to boost sales. Johnson & Johnson (NYSE:JNJ) is also focusing on expanding in emerging markets, where the demand for healthcare products is growing quickly. Additionally, Johnson & Johnson (NYSE:JNJ) is committed to sustainability and corporate responsibility, setting goals to reduce its environmental impact and improve access to healthcare, which appeals to socially conscious investors.
Bridgewater’s stake in Johnson & Johnson (NYSE:JNJ) includes 3,204,305 shares, valued at $468.3 million.
Overall, JNJ ranks 7th on our list of the best stocks to buy according to billionaire Ray Dalio. While we acknowledge the potential of JNJ, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JNJ, but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published on Insider Monkey.
