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Billionaire Ray Dalio’s Bridgewater Associates 13F Portfolio: Top 10 Stock Picks

In this article, we discuss the top 10 stock picks of billionaire Ray Dalio’s Bridgewater Associates 13F portfolio. If you want to see more stocks in this selection, check out Billionaire Ray Dalio’s Bridgewater Associates 13F Portfolio: Top 5 Stock Picks.

Ray Dalio founded Bridgewater Associates from his apartment in Manhattan back in 1975 and turned it into one of the biggest hedge funds in the world, with an asset under management (AUM) of over $150 billion as of 2022. Mr. Dalio achieved this milestone by developing a deep understanding of market forces and macroeconomic factors. As Mr. Dalio progressed, he established an ethos that made Bridgewater Associates one of the five most important private companies in the US, according to the renowned Fortune magazine. Given Mr. Dalio’s comprehension of macroeconomics and his unique investing perspective, some analysts have labeled him as the Steve Jobs of investing.

Mr. Dalio’s investing expertise can also be gauged by the fact that the flagship Pure Alpha fund of Bridgewater Associates is up 22% YTD, while the broader markets have been heavily in the red due to global macroeconomic concerns. Some of the popular stocks held by Mr. Dalio’s Bridgewater Associates include The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and PepsiCo, Inc. (NYSE:PEP), as of Q3 2022.

BRIDGEWATER ASSOCIATES
BRIDGEWATER ASSOCIATES

Ray Dalio of Bridgewater Associates

Our Methodology

In this article, we discuss the top 10 stock picks of billionaire Ray Dalio’s 13F portfolio. These stocks have been picked from the Q3 portfolio of Mr. Dalio’s Bridgewater Associates. We have ranked these stocks in terms of the fund’s stake in them. The majority of these stocks appear to be defensive in nature and reflect that Mr. Dalio’s hedge fund is bracing for a possible recession.

Billionaire Ray Dalio’s Bridgewater Associates 13F Portfolio: Top 10 Stock Picks

10. CVS Health Corporation (NYSE:CVS)

Number of Hedge Fund Holders: 65

Ray Dalio’s Bridgewater Associates’ Holdings: $293,711,000

Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 1.48%

CVS Health Corporation (NYSE:CVS) is a Rhode Island-based healthcare solution provider through its retail pharmacy chain, pharmacy benefits manager (PBM), and healthcare benefits (HCB) segment. The company covers various touchpoints in the healthcare segment through its divisions.

In a research note issued on November 6, John Ransom at Raymond James gave CVS Health Corporation (NYSE:CVS) stock a target price of $115, along with an Outperform rating. The development occurred after the company reported better-than-anticipated Q3 2022 results that were driven by the stellar performance of the HCB business. Meanwhile, the performance of the pharmacy retail and pharmacy benefits management businesses was also in line with expectations. Furthermore, CVS Health Corporation (NYSE:CVS) is considered among the defensive stocks expected to hold its ground in case of a recession. CVS Health Corporation (NYSE:CVS) has an annual forward dividend yield of 2.26% as of November 14.

Vltava Fund shared its bullish outlook on CVS Health Corporation (NYSE:CVS) in its Q3 2022 investor letter. Here’s what the firm said:

CVS is a leader in the provision of healthcare services in the USA. It has three main businesses: an enormous network of pharmacies, a health insurance company, and “prescription benefit management”, which is a kind of intermediary between insurance companies and pharmacies. This is the result of large acquisitions over the past 15 years – most notably of Caremark (2007) and Aetna (2018). The markets had deemed its acquisition of health insurer Aetna too expensive (and we agree), so CVS stock then fell into disfavour for a few years.

We took advantage of this in the summer of 2020 and brought the stock into our portfolio at a time when its price was pressed down still further by the coronavirus pandemic. CVS is a giant. It has revenues of USD 300 billion, making it one of the largest companies in the world. It is a relatively stable and highly profitable company with strong free cash flow. Over the past few years, CVS has focused primarily on reducing debt.

This is already much lower than it had been after the Aetna acquisition, and most of the cash is now likely to go to shareholders through share buybacks or be used for smaller acquisitions to grow the company further. CVS trades at about 11 times annual earnings, which is a very appealing valuation given the expected future growth in profitability and overall modest cyclicality in its business.”

9. Abbott Laboratories (NYSE:ABT)

Number of Hedge Fund Holders: 61

Ray Dalio’s Bridgewater Associates’ Holdings: $298,016,000

Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 1.5%

Abbott Laboratories (NYSE:ABT) is a Chicago, Illinois-based healthcare and medical devices company.

On October 21, Abbott Laboratories (NYSE:ABT) stock was assigned an Overweight rating and a target price of $114 by Matt Miksic at Barclays. The analyst believes that the sell-off following the Q3 2022 results has been overdone and has taken the stock price to levels seen in early October. Miksic highlighted that there were positives in the company’s results, as reflected by the encouraging performance of the cardio devices, diabetes instruments, and established pharmaceutical division (EPD). Experts believe that Abbott Laboratories (NYSE:ABT) has a strong balance sheet and can capitalize well on the fast-growing medical technology markets. The stock offers an annual forward dividend yield of 1.81% as of November 14.

Despite the earnings beat and raised guidance, the stock price plummeted as investors believed that the results were primarily driven by the strong performance of the COVID testing services as opposed to the performance of the core business segments that fell short of consensus estimates.

Diamond Hill Capital shared its outlook on Abbott Laboratories (NYSE:ABT) in its Q3 2022 investor letter. Here’s what the firm said:

“Also among our bottom contributors were health care products manufacturer Abbott Laboratories (NYSE:ABT), global pharmaceutical company Pfizer, media and technology giant Alphabet, and insurance company American International Group (AIG).

Abbott has been working through a recall of its infant formula brand Similac in the US, which has continued to pressure its share price. Although the recall will impact near-term revenues, we are not concerned about any long-term impacts. We remain optimistic about the company given it is one of the highest quality names in health care, in our view, with a talented management team that makes smart capital allocation decisions. Abbott also has leading health care and consumer franchises with a particularly strong competitive position in its medical device business. The company continues to launch innovative products in key strategic areas (such as diabetes, structural heart, and diagnostics), which should help drive not only revenue growth but margin expansion.”

8. Pinduoduo Inc. (NASDAQ:PDD)

Number of Hedge Fund Holders: 41

Ray Dalio’s Bridgewater Associates’ Holdings: $317,064,000

Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 1.6%

Pinduoduo Inc. (NASDAQ:PDD) is a Shanghai, China-based social e-commerce platform with a user base of 900 million globally. The company has the distinction of introducing team purchase and consumer-to-manufacturer (C2M) concepts in the Chinese e-commerce sector.

Pinduoduo Inc. (NASDAQ:PDD) has a strong affiliation with the Chinese agricultural sector, as 16 million farmers have connected with the platform as of 2022. The company is making headway in the US e-commerce market through its cross-border e-commerce application Temu. The application is one of the top e-commerce applications in the US in terms of new downloads. On October 17, Temu was the top shopping application on the iPhone Store in the US. Within a short period since its inception in 2015, Pinduoduo Inc. (NASDAQ:PDD) has emerged as one of the leading Chinese e-commerce players with international aspirations, just like Alibaba Group Holding Limited (NYSE:BABA) and JD.com, Inc. (NASDAQ:JD).

Here’s what Tao Value said about Pinduoduo Inc. (NASDAQ:PDD) in its Q4 2021 investor letter:

“On the detracting side, one of our largest detractors includes Pinduoduo (ticker: PDD). Pinduoduo (PDD) reported the second consecutive GAAP profit quarter yet missed on the revenue due to nation-wide consumption weakness & scaled back Sales & Marketing efforts. Market disliked it and the stock price plunged on the earnings. In my opinion, the accounting profits proved the original thesis of using S&M to acquire users and using great shopping experience to keep them. After realizing the first growth curve, Pinduoduo now shifted its focus & investment to agriculture. It is still very early, but the reduced size due to price drop warrants a position to watch and continue grow with such a team with strong culture.”

7. McDonald’s Corporation (NYSE:MCD)

Number of Hedge Fund Holders: 50

Ray Dalio’s Bridgewater Associates’ Holdings: $487,730,000

Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 2.46%

McDonald’s Corporation (NYSE:MCD) is a Chicago, Illinois-based fast food restaurant chain known for its burgers globally. Furthermore, the company is also regarded as a real estate company as it owns thousands of locations around the world. The company not only generates loyalties from the sales at these locations but also receives rental payments from the franchisees.

In a research note issued on October 28, Christopher Carril at RBC Capital increased the target price on McDonald’s Corporation (NYSE:MCD) stock from $275 to $295 and reiterated an Overweight rating. The analyst highlighted that the Q3 2022 earnings beat reflects McDonald’s Corporation’s (NYSE:MCD) ability to take a defensive as well as an offensive stance under any economic circumstances. The analyst added that the company’s US business does not require unit growth or significant remodeling in a rising interest rate environment. McDonald’s Corporation (NYSE:MCD) offers an annual forward dividend yield of 2.24% as of November 14.

Of the 895 hedge funds in Insider Monkey's database, McDonald’s Corporation (NYSE:MCD) was held by 50 hedge funds as of Q2 2022.

6. Walmart Inc. (NYSE:WMT)

Number of Hedge Fund Holders: 67

Ray Dalio’s Bridgewater Associates’ Holdings: $522,693,000

Percentage of Ray Dalio’s Bridgewater Associates’ Portfolio: 2.64%

Walmart Inc. (NYSE:WMT) is an Arkansas-based retail company with a chain of discount department stores, grocery stores, and hypermarkets.

Krisztina Katai at Deutsche Bank gave Walmart Inc. (NYSE:WMT) stock a target price of $161 along with a Buy rating on November 11 ahead of the Q3 FY23 results. Experts believe that the company will outperform consensus estimates for the third quarter. Research has shown that there is still momentum in the grocery shopping category that will counter the adverse impact on the discretionary shopping category and Walmart Inc.’s (NYSE:WMT) general merchandise. Furthermore, there is a widespread belief that the company will reiterate its FY22 guidance despite the tough macroeconomic circumstances. Analysts think the current stock price dip can be an attractive entry point for any potential investor. Walmart Inc.'s (NYSE:WMT) annual forward dividend yield stands at 1.57% as of November 14.

Leaven Partners shared its outlook on Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter. Here’s what the firm said:

“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Walmart (NYSE:WMT), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6%[2] from 7.2% in early August and slashing full-year profit growth to 4.5%.”

Besides Walmart Inc. (NYSE:WMT), Mr. Dalio also has a stake in The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and PepsiCo, Inc. (NYSE:PEP) as of Q3 2022.

 

Click to continue reading and see Billionaire Ray Dalio’s Bridgewater Associates 13F Portfolio: Top 5 Stock Picks.

 

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Disclose. None. Billionaire Ray Dalio’s Bridgewater Associates 13F Portfolio: Top 10 Stock Picks is originally published on Insider Monkey.