In this article, we discuss top 10 stock picks of billionaire Ray Dalio. If you want to skip our detailed analysis of these stocks, go directly to Top 5 Stock Picks of Billionaire Ray Dalio.
Ray Dalio is often referred to as the founder of the largest hedge fund in the world. His fund, Bridgewater Associates, manages over $223 billion in assets under management for 105 clients spread across the globe. Dalio, a billionaire with a personal net worth of close to $20 billion, also manages an equity portfolio worth over $17 billion. During the fourth quarter of 2021, the fund made new purchases in 137 stocks, additional purchases in 299, sold out of 89 stocks, and reduced holdings in 292 equities. The top ten holdings of the fund, concentrated in the consumer goods and healthcare sectors, comprise over 35% of the total portfolio.
Dalio recently underlined his economic outlook while speaking at a sustainability event in Abu Dhabi in January, addressing questions about rising inflation, climate change crisis and its impact on business, and the political fragmentation of the United States. Dalio cautioned against transitioning away from fossil fuels quickly, noting that depriving the oil industry of finances would contribute to inflation in the present economic environment. He also lauded oil producers for keeping up with rising energy demand.
However, Dalio also highlighted that rising energy costs needed to be curtailed in order to benefit the masses. He said he had faith that oil producers would maintain supplies high enough so as to lead to lower energy costs in the coming months. Dalio also warned against the rising political divide in the United States and the impact it would have on businesses. The investor claimed that neither Republicans nor Democrats would be willing to accept the results of the next election if they lost, leading to a catastrophic situation in the country.
Some of these views are reflected in the stock market activity of Bridgewater Associates over the past few months. Dalio has been busy preparing his portfolio to deal with the changing economic conditions that an interest rate hike would bring. Some of the top stocks in the portfolio of Bridgewater Associates at the end of December 2021 included The Procter & Gamble Company (NYSE:PG), Costco Wholesale Corporation (NASDAQ:COST), and Johnson & Johnson (NYSE:JNJ), among others discussed in detail below.
Our Methodology
The stocks were picked from the fourth quarter regulatory filings of Bridgewater Associates. The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey in Q3 2021.
Top Stock Picks of Billionaire Ray Dalio
10. Starbucks Corporation (NASDAQ:SBUX)
Number of Hedge Fund Holders: 58
Starbucks Corporation (NASDAQ:SBUX) is a specialty coffee retailer based in Washington. Elite hedge funds hold large stakes in the company. Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in Starbucks Corporation (NASDAQ:SBUX), with 10.7 million shares worth more than $1.1 billion.
Latest filings show that Bridgewater Associates owned over 2.5 million shares of Starbucks Corporation (NASDAQ:SBUX) at the end of the fourth quarter of 2021 worth $299 million, representing 1.74% of the portfolio. The fund increased its stake in the company by 13% compared to filings for the third quarter.
Just like The Procter & Gamble Company (NYSE:PG), Costco Wholesale Corporation (NASDAQ:COST), and Johnson & Johnson (NYSE:JNJ), Starbucks Corporation (NASDAQ:SBUX) is one of the stocks that hedge funds are buying.
In its Q2 2021 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Starbucks Corporation (NASDAQ:SBUX) was one of them. Here is what the fund said:
“Starbucks reported comparable store sales that grew +9% in the U.S. (and up +11% compared to 2019) and up substantially in China as the Company lapped the effects of the pandemic in the region. Starbucks’ financial strength continues to enable investment in store growth, alternative formats, drive-throughs, plus technology to drive higher throughput and further distance itself from smaller, fragmented local and regional competitors that have struggled over the past year. Starbucks has opened over 1000 net new stores over the past 12 months in its international market, primarily in China where it grew its footprint by a double-digit percentage, despite the various obstacles posed by the pandemic. Starbucks will continue to distance itself from competitors and will experience solid growth in the nascent Chinese market while optimizing its more mature U.S. market to drive productivity gains.”
9. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 63
Abbott Laboratories (NYSE:ABT) makes and sells healthcare products. Securities filings reveal that Bridgewater Associates owned over 2.1 million shares of the company at the end of December 2021 worth $307 million, representing 1.78% of the portfolio. During the fourth quarter of 2021, the fund increased its stake in the firm by 17% quarter-over-quarter.
Top hedge funds are bullish on Abbott Laboratories (NYSE:ABT). Among the hedge funds being tracked by Insider Monkey, Ohio-based investment firm Diamond Hill Capital is a leading shareholder in Abbott Laboratories (NYSE:ABT), with 6.2 million shares worth more than $732 million.
In its Q2 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Abbott Laboratories (NYSE:ABT) was one of them. Here is what the fund said:
“Abbott Laboratories was the lone detractor in the quarter as the company preannounced that revenue and earnings this year would be below their previous guidance. We still expect the company to grow earnings more than 20% this year and continue double-digit earnings growth in the years to come. However, weakness in COVID-19 testing revenue is primarily responsible for the guidance reduction. Abbott is a leader in multiple types of COVID-19 diagnostic tests, and the largely successful vaccine rollout globally is leading to less COVID testing than the company expected. Two years ago, these tests obviously accounted for $0 in revenue but recently accounted for nearly $10 billion in annualized revenues as of the fourth quarter of 2020. We have expected COVID testing revenues to decline sequentially every quarter and eventually level out at less than $1 billion per year. We are not surprised by the current reality, but the decline has been more rapid than what management had expected.
Abbott is a diversified medical products company with likely strong growth to come from its core businesses outside of COVID testing— our investment thesis was not dependent on pandemic related revenue. While the reduction in guidance is atypical for Abbott’s conversative management team, we do not believe it changes our long-term growth assumptions or the investment case in Abbott.”
8. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 71
Walmart Inc. (NYSE:WMT) owns and runs a chain of retail stores. It is one of the favorite retail stocks on Wall Street. Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Walmart Inc. (NYSE:WMT), with 13 million shares worth more than $1.8 billion.
According to the latest data, Bridgewater Associates owned more than 2.8 million shares of Walmart Inc. (NYSE:WMT) at the end of the fourth quarter of 2021 worth $409 million, representing 2.38% of the portfolio. The fund slashed its position in the firm by 44% compared to filings for the third quarter of 2021.
7. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 58
McDonald’s Corporation (NYSE:MCD) owns and runs fast-food restaurants across the world. Regulatory filings indicate that Bridgewater Associates owned over 1.6 million shares of the company at the end of December 2021 worth $449 million, representing 2.61% of the portfolio. The investment firm increased its stake in the firm by 16% during the fourth quarter.
Major hedge funds hold large stakes in McDonald’s Corporation (NYSE:MCD). At the end of the third quarter of 2021, 58 hedge funds in the database of Insider Monkey held stakes worth $3.3 billion in McDonald’s Corporation (NYSE:MCD), compared to 66 the preceding quarter worth $2.7 billion.
6. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 115
Alibaba Group Holding Limited (NYSE:BABA) is a China-based technology company. It is one of the top Chinese stocks listed in the US. 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 (NYSE:BABA), with 14 million shares worth more than $2 billion.
Latest data shows that Bridgewater Associates owned over 4.2 million shares of Alibaba Group Holding Limited (NYSE:BABA) in the of the fourth quarter of 2021 worth $507 million, representing 2.94% of the portfolio. The fund increased its stake in the tech giant by 30% quarter-over-quarter between October and December.
Alongside The Procter & Gamble Company (NYSE:PG), Costco Wholesale Corporation (NASDAQ:COST), and Johnson & Johnson (NYSE:JNJ), Alibaba Group Holding Limited (NYSE:BABA) is one of the stocks that institutional investors have their eye on.
In its Q1 2021 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
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Disclosure. None. Top 10 Stock Picks of Billionaire Ray Dalio is originally published on Insider Monkey.
