In this article, we discuss the 10 stocks that Ray Dalio is doubling down on.
Ray Dalio, one of the most successful hedge fund managers of 2020, has decided to set up a Chinese fund through a local subsidiary at a time when Chinese stocks are being hammered due to an ongoing government crackdown in the Asian country. A report in the Securities Times suggests that the investor is looking to raise nearly $468 million for the purpose. His latest move comes as no surprise since over half of the assets he manages are for non-US clients.
Dalio was recently interviewed by news publication The New York Times ahead of the launch of his new book titled The Changing World Order that tackles complex subjects like inflation, the US-China rivalry, and the rise of cryptocurrencies. In the interview, Dalio delves into the business history of successful empires like America, China, and the Europeans through history, drawing parallels and providing insight for the present-day investor from them. Dalio has a personal net worth of $20 billion and his hedge fund had a portfolio value of $18 billion at the end of the third quarter of 2021.
Some of the top stocks in the portfolio of Bridgewater Associates at the end of September included Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA), and Meta Platforms, Inc. (NASDAQ:FB), among others discussed in detail below.
Our Methodology
These were picked from the investment portfolio of Bridgewater Associates at the end of the third quarter of 2021. The stocks in which the fund increased stake by 400% or more, compared to filings for the second quarter, were preferred.
The hedge fund sentiment around each stock was calculated using the data of 873 hedge funds tracked by Insider Monkey.
Ray Dalio is Doubling Down on These Stocks
10. Floor & Decor Holdings, Inc. (NYSE:FND)
Number of Hedge Fund Holders: 28
Percentage Increase in Stake During Q3: 459%
Floor & Decor Holdings, Inc. is a specialty retailer of hard surface flooring. The company recently posted earnings for the third quarter, reporting earnings per share of $0.60, beating estimates by $0.03. The revenue over the period was $876 million, up 28% year-on-year.
Latest data shows that Bridgewater Associates owned 50,324 shares of Floor & Decor Holdings, Inc. at the end of the third quarter of 2021 worth $6 million, representing 0.03% of the portfolio.
At the end of the second quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $1.16 billion in Floor & Decor Holdings, Inc., down from 38 the preceding quarter worth $1.11 billion.
Just like Apple Inc., Tesla, Inc., and Meta Platforms, Inc., Floor & Decor Holdings, Inc. is one of the stocks that hedge funds are buying.
9. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 37
Percentage Increase in Stake During Q3: 535%
General Mills, Inc. (NYSE:GIS) markets branded consumer foods. According to regulatory filings, Bridgewater Associates owned 271,421 shares in the company at the end of September 2021 worth $16.2 million.
Citi analyst Wendy Nicholson recently upgraded General Mills, Inc. stock to Buy from Neutral and raised the price target to $70 from $63, noting that the firm “offered a good story in a tough sector” and that it was trading at very cheap prices.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in General Mills, Inc. with 3.7 million shares worth more than $226 million.
In its Q3 2021 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and General Mills, Inc. (NYSE:GIS) was one of them. Here is what the fund said:
“In the 1970s, blackout rules prevented televising NFL home games that weren’t sold out. It was always uncertain whether or not the Minnesota Vikings’ games would be televised. I remember how excited I’d be each week hearing that General Mills had purchased the remaining tickets, allowing the game to be on TV. Some said General Mills did this for its stakeholders—its employees and community—as opposed to maximizing profits for its shareholders. I believe stakeholders and shareholders both benefitted.
Consider the long-term benefits of General Mills being the hero that let us watch those games. It made employees proud of their employer and maybe helped with talent acquisition. The thousands of disadvantaged kids who got to attend NFL games were perhaps more likely to become General Mills customers or employees. And across the state, maybe we were all more likely to buy Betty Crocker cake mix instead of Duncan Hines. While the tickets were purchased in the name of being a good corporate citizen, I believe it was the most effective marketing ever done by General Mills and clearly benefitted the company’s shareholders.
Would Friedman argue against this spending because it reduced profits? Absolutely not. His writing from more than 40 years ago sounds eerily timely: “In the present climate of opinion, with its widespread aversion to ‘capitalism,’ ‘profits,’ the ‘soulless corporation’ and so on, this is one way for a corporation to generate goodwill as a by-product of expenditures that are entirely justified in its own self-interest.
General Mills accepted lower short-term profits in its pursuit of higher long-term value. And the stakeholders also benefitted. In The Heart of Capitalism, Joly states that “shareholder or stakeholder” tradeoffs are artificial because an “and” solution often exists. “We maximize performance not by choosing between stakeholders, but by embracing all of them. We choose employees and customers and shareholders and the community.” Joly cites examples from his time at Best Buy, including reducing its carbon footprint by installing LED lights throughout the stores. “This helps the environment and helped us save money on our energy consumption. Again, not a zero-sum game.”
8. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 156
Percentage Increase in Stake During Q3: 888%
Mastercard Incorporated (NYSE:MA) provides transaction processing solutions. The company recently announced that it would be partnering with crypto service providers in the Asia-Pacific region to launch the first crypto-linked payment cards in the area.
The hedge fund of billionaire Ray Dalio owned over 6,372 shares of Mastercard Incorporated at the end of the third quarter of 2021 worth more than $2.2 million, representing a very small portion of the total portfolio of the fund.
Among the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated with 5.8 million shares worth more than $2.1 billion.
In its Q4 2020 investor letter, Bretton Fund, an asset management firm, highlighted a few stocks and Mastercard Incorporated (NYSE:MA) was one of them. Here is what the fund said:
“While consumers resumed much of their spending by summer, what and how they used their Visas and Mastercards changed. For obvious reasons, people shifted to contactless payments—one of the Covid-era changes we think is permanent—and replaced travel purchases with online shopping and food delivery. Consumers spent more on their debit cards and less on their credit cards; Visa and Mastercard make more per transaction on the latter. They also make more on cross-border transactions that come mostly from international travel, which ground to a halt early in the pandemic. Visa’s and Mastercard’s earnings per share fell by 7% and 16%, respectively, compared to their usual mid-teens growth. We’re not too worried, and we think they’ll catch up nicely in the post-vaccine world. Visa’s stock returned 17.1% and Mastercard’s 20.2%.”
7. Automatic Data Processing, Inc. (NASDAQ:ADP)
Number of Hedge Fund Holders: 41
Percentage Increase in Stake During Q3: 893%
Automatic Data Processing, Inc. (NASDAQ:ADP) provides cloud-based human capital management solutions. Bridgewater Associates owned 12,870 shares in the company at the end of September 2021 worth $2.5 million, representing 0.01% of the portfolio of the fund.
Baird analyst Mark Macon recently raised the price target on Automatic Data Processing, Inc. stock to $242 from $228 and kept a Neutral rating on the shares, noting that the firm had “ample room for growth” in the coming months.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in Automatic Data Processing, Inc. with 7 million shares worth more than $1.4 billion.
6. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 155
Percentage Increase in Stake During Q3: 1,078%
Alphabet Inc. (NASDAQ:GOOG) is a California-based tech firm that owns and runs the internet search engine Google. The firm was recently invited by the US Department of Defense to bid on a massive new government cloud contract.
Latest securities filings reveal that Bridgewater Associates owned 4,947 shares in Alphabet Inc. at the end of the third quarter of 2021 worth $13.2 million.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. with 2.9 million shares worth more than $7.3 billion.
In addition to Apple Inc., Tesla, Inc., and Meta Platforms, Inc., Alphabet Inc. is one of the stocks on the radar of elite investors.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
5. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 266
Percentage Increase in Stake During Q3: 1,198%
Meta Platforms, Inc. is a technology firm that helps people make digital connections. Regulatory filings show that Bridgewater Associates owned 26,217 shares in the company at the end of the third quarter of 2021 worth over $8.8 million, representing 0.04% of the portfolio.
Piper Sandler analyst Thomas Champion recently maintained a Neutral rating on Meta Platforms, Inc. stock with a price target of $385, calling the decision of the firm to change brand name from Facebook to Meta a “big, bold, and risky bet”.
At the end of the second quarter of 2021, 266 hedge funds in the database of Insider Monkey held stakes worth $42 billion in Meta Platforms, Inc., up from 257 in the preceding quarter worth $40 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Facebook, while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
4. Marsh & McLennan Companies, Inc. (NYSE:MMC)
Number of Hedge Fund Holders: 41
Percentage Increase in Stake During Q3: 1,519%
Marsh & McLennan Companies, Inc. is a professional services company based in New York. In earnings results for the third quarter, posted in late October, it reported earnings per share of $1.08, beating estimates by $0.08. The revenue over the period was $4.5 billion, up 15% year-on-year.
According to the latest data, Bridgewater Associates owned 25,369 shares in Marsh & McLennan Companies, Inc. at the end of September 2021 worth $3.8 million, representing 0.02% of the portfolio of the fund.
At the end of the second quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $2.5 billion in Marsh & McLennan Companies, Inc., up from 37 in the preceding quarter worth $2.1 billion.
3. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 162
Percentage Increase in Stake During Q3: 1,745%
Visa Inc. (NYSE:V) operates as a payments technology firm. Securities filings show that Bridgewater Associates owned 49,925 shares in the company at the end of the third quarter of 2021 worth $11.1 million, representing 0.06% of the portfolio.
On November 17, investment advisory UBS initiated coverage of Visa Inc. stock with a Buy rating and a price target of $275, noting that the shares were trading at an “attractive valuation” considering the leading position of the firm in mature areas.
At the end of the second quarter of 2021, 162 hedge funds in the database of Insider Monkey held stakes worth $27 billion in Visa Inc., down from 164 in the preceding quarter worth $26 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Visa Inc. (NYSE:V) was one of them. Here is what the fund said:
“To make room for these new names with more attractive outlooks related to the reopening, we sold out of companies where the thesis is not playing out at the pace we expected including Visa.”
2. CSX Corporation (NASDAQ:CSX)
Number of Hedge Fund Holders: 56
Percentage Increase in Stake During Q3: 2,343%
CSX Corporation (NASDAQ:CSX) provides rail-based freight transportation services. The company has a market cap of more than $80 billion and posted over $10.5 billion in revenue last year. It recently beat market expectations on earnings for the third quarter.
Bridgewater Associates owned 174,958 shares in CSX Corporation at the end of September 2021 worth $5.2 million, representing 0.02% of the portfolio.
At the end of the second quarter of 2021, 56 hedge funds in the database of Insider Monkey held stakes worth $4.2 billion in CSX Corporation, up from 53 in the preceding quarter worth $3.6 billion.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 138
Percentage Increase in Stake During Q3: 2,625%
Apple Inc. makes and sells consumer electronics. At the end of the third quarter of 2021, Bridgewater Associates owned 72,600 shares in the company worth $10.9 million, representing 0.06% of the portfolio.
Several reports published recently suggest that Apple Inc. has achieved a “chip-related” breakthrough in its quest to develop an all-electric and fully autonomous car, a product that the firm could launch as soon as 2025.
At the end of the second quarter of 2021, 138 hedge funds in the database of Insider Monkey held stakes worth $145 billion in Apple Inc., up from 127 in the preceding quarter worth $131 billion.
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
You can also take a peek at Why These 10 Stocks Fell on Monday and 10 Penny Stocks With Long-Term Growth Catalysts.
Follow Insider Monkey on Twitter
Suggested Articles:
- Tech Stock Portfolio: 10 Stock Picks from Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management
- Why These 10 Stocks Were in the Spotlight on Monday
- 10 Stocks to Invest In: Adam Peterson’s Magnolia Capital Fund Portfolio
This article is originally published at Insider Monkey.
