We recently compiled a list of the Billionaire Ray Dalio’s Bridgewater Is Crazy About These 15 Stocks. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against the other stocks Ray Dalio’s Bridgewater is crazy about.
Ray Dalio, a seasoned global macro investor with over 50 years of experience, founded Bridgewater Associates from his two-bedroom apartment in New York City and led the firm for most of its 47-year history. Over the years, Dalio has been regarded as one of the most influential investors, renowned for accurately predicting major financial trends, including the 2008 financial crisis. TIME magazine recognized him as one of the “100 Most Influential People in the World” for the significant impact of his insights on global macroeconomic policies.
Bridgewater Associates has since become one of the world’s largest and most successful hedge funds. Known for its innovative use of macroeconomic analysis to shape investment strategies, particularly in global markets, the firm introduced groundbreaking approaches like the “Pure Alpha” strategy. These methods, designed to perform consistently across varying economic conditions, solidified Dalio’s reputation as a visionary in asset management.
Ray Dalio’s China Bet
Ray Dalio began investing in China in 2023, allocating approximately $3 billion to the market. He has previously suggested that a significant economic restructuring might be necessary to support China’s economy. One of the key challenges is the country’s struggling property sector, where declining prices and developer defaults have heightened economic risks. Speaking at the 2024 Milken Institute Asia Summit in Singapore, Dalio compared the situation to Japan’s economic stagnation beginning in 1990. “They need to have a restructuring of the debt. It’s a very complicated and politically charged thing,” he remarked.
Despite these challenges, Dalio highlights the immense potential of the world’s second-largest economy, home to the largest and rapidly growing middle class. Millions of Chinese citizens enter the middle class each year, and if the government can successfully restructure debt in critical sectors like housing, China’s long-term growth prospects remain significant. While the country’s debt-to-GDP ratio has nearly tripled over the past decade—fueling skepticism as sectors like real estate struggle under mounting debt payments—Dalio envisions a “beautiful deleveraging” process. Having coined the term after the 2008 crisis, the billionaire believes this approach could make holding cash in banks unattractive, encouraging investment and economic revitalization. Although concerns about China’s debt burden persist, it’s notable that the country has historically doubled its GDP roughly every five years, and if it manages to address its debt and leverage issues, Dalio’s strategic bet could yield significant returns.
That said, the billionaire highlighted the need for caution when investing in China, emphasizing that every country experiences economic cycles with periods of growth and decline. He advised against over-concentrating investments in any single nation, including China, to prevent it from disproportionately influencing a portfolio. He stressed that the critical factor is carefully managing the size and structure of such investments to balance risk and opportunity effectively.
The “All-Weather” ETF
Bridgewater Associates recently partnered with State Street’s asset management division to expand into the retail investment market, marking a strategic shift for the hedge fund. Announced on November 19, the collaboration will introduce the “All-Weather” ETF, which leverages one of Ray Dalio’s most renowned strategies. Bridgewater will act as a sub-adviser, providing a tailored daily model portfolio for the fund.
This move reflects a growing trend among hedge funds venturing into the $14 trillion ETF market, which has flourished due to its liquidity, tax efficiency, and typically lower fees. Originally developed in 1996 to manage Ray Dalio’s trust assets, the All-Weather strategy employs a risk-parity approach. Instead of concentrating heavily on high-risk assets like stocks, the strategy diversifies across asset classes, including bonds and commodities, using leverage on lower-risk investments to achieve comparable returns with reduced volatility.
Our Methodology
We examined Bridgwater Associates’ stock portfolio from the third quarter of 2024. The stocks are ranked based on the firm’s stake value in each holding.
Why are we interested in 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).
A wide view of an Apple store, showing the range of products the company offers.
Apple Inc. (NASDAQ:AAPL)
Bridgewater Associates’ Stake Value as of Q3: $240.4 million
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL), a globally renowned technology leader, is known for its iconic products like the iPhone, Mac, and Apple Watch, as well as its ecosystem of services, including iCloud and Apple Music.
In its third-quarter earnings, Apple Inc. (NASDAQ:AAPL) reported a record $94.9 billion in revenue, marking a 6% year-over-year increase. CEO Tim Cook attributed this growth to the success of the latest product lineup, including the iPhone 16 series, Apple Watch Series 10, and AirPods 4.
On November 19, Jefferies maintained a Hold rating on Apple Inc. (NASDAQ:AAPL) shares with a price target of $211.84. The firm’s analysis highlighted potential risks to Apple’s gross margins and discounted cash flow (DCF) value due to proposed tariff hikes under a Trump policy scenario. These tariffs could reduce gross margins by 3.0-6.7 percentage points and DCF value by 5-10%, assuming no adjustments in average selling price (ASP) or volume. While Apple Inc. (NASDAQ:AAPL) is working to diversify production outside of China, only 10% of iPhone production has shifted so far. Jefferies focused its analysis on the iPhone, which remains Apple’s largest revenue driver, contributing 52% of total sales.
Madison Sustainable Equity Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q3 2024 investor letter:
“Alphabet Inc., Eli Lilly and Company, Qualcomm Incorporated, Microsoft Corporation, and Apple Inc. (NASDAQ:AAPL) were the largest detractors. Apple has been volatile in the last quarter but ended on strength. Early in the quarter, Apple benefited from the introduction of their AI strategy, Apple Intelligence. They followed in September with the new iPhone 16, which also created some excitement. We are underweight to Apple, which has resulted in a headwind for performance.”
Overall AAPL ranks 7th on our list of the stocks Ray Dalio’s Bridgewater is crazy about. While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that certain 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 AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.