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Bridgewater Associates’ Returns, AUM, and Holdings

Nina Zdinjak

One of the worlds wealthiest people, billionaire Ray Dalio founded one of the largest hedge funds in the world, Bridgewater Associates, back in 1975 out of his two-bedroom apartment. Although he was only 26 years old when decided to start his own investment firm, his enthusiasm for investing had been evident for a long time. Dalio bought his first stock, from the money he earned as a caddy, when he was just 12 years old. It makes sense he got hooked on investing, as his first shares tripled in value. Prior to founding Bridgewater Associates, Ray Dalio worked at Shearson Hayden Stone, a brokerage company, where he was trading futures. Before joining Shearson, Dalio worked at Dominick & Dominick LLC and at the New York Stock Exchange as a clerk. He earned a Bachelor’s degree in Finance from Long Island University (CW Post) and an MBA from Harvard Business School.

Bridgewater Associates’ Return, AUM, and Holdings
Bridgewater Associates’ Return, AUM, and Holdings

Bridgewater Associates employs several investment strategies, and there are a few that the fund developed. One of those strategies is known as “risk parity”, which was first introduced through its renowned All Weather fund. Some of its funds have performed very well in recent years, while others have witnessed fluctuating returns.

Its All Weather @ 12% fund lost 4.61% in 2013. The next year it returned 8.58%, only to have another down year in 2015, when it lost 8.36%. It improved its performance in 2016 with a return of 11.61%, jumping to 13.09% in 2017. 2018 appears to be on the verge of disappointment, as the fund had lost 0.80% through October 29. All Weather @ 12% had a total return of 445.96% and a compound annual return of 7.9%. Its worst drawdown was 32.26.

Its Pure Alpha Fund I has had more stable performance in recent years, though also underwhelming performance. It returned 3.46% in 2013, 2.48% in 2014, 3.34% in 2015, 2.00% in 2016, 1.25% in 2017, and 1.93% in 2018 (through October 29). Pure Alpha Fund I has delivered a total return of 822.08% and a compound annual return of 8.63%, while its worst drawdown was 14.18. Bridgewater Associates has around $160 billion in assets that it manages for around 350 big institutional clients, which count pension funds, central banks and university endowments.

Insider Monkey’s flagship strategy identifies the best performing 100 hedge funds at the end of each quarter and invests in their consensus stock picks. This way it is always invested in the best ideas of the best performing hedge funds and is able to generate much higher returns than the market. Since its inception in May 2014, our flagship strategy generated a cumulative return of 96.9%, beating the S&P 500 ETF (SPY) by over 40 percentage points (see the details here).

On September 30, Bridgewater Associates’ 13F portfolio was valued at $9.65 billion. The fund made many changes to its holdings during the third-quarter, adding 64 new positions and dumping around 170 companies. Among the stocks in the fund’s portfolio are some of the 25 Stocks Billionaires Are Piling On, such as Alliance Data Systems Corporation (NYSE:ADS), in which the fund boosted its stake by 8% in Q3 to 99,167 shares worth $23.42 million. More about the fund’s investment moves in the third-quarter you can find on the next page.

Out of 64 new positions Bridgewater Associates opened during the third-quarter, the top ones included stakes in General Electric Company (NYSE:GE) (2.02 million shares valued at $22.72 million) and PVH Corp (NYSE:PVH) (118,228 shares), establishing a position in PVH that was worth $17.07 million at the end of September.

It also made a big investment in DaVita Inc (NYSE:DVA), a medical care provider that offers kidney dialysis services to patients who suffer from chronic kidney failure, buying 190,154 shares that were valued at $13.62 million on September 30. Until two years ago, DaVita was known under a different name: DaVita HealthCare Partners Inc. It was founded back in 1994, and is based in Denver, Colorado. In its recent third-quarter financial report, DaVita disclosed consolidated revenue of $2.85 billion, alongside operating income of $289 million, which was down from $395 million for the same period of 2017. It also reported cash flow of $362 million and free cash flow of $226 million. Over the past 12 months, the company’s stock price has gained 18.33%. Of the 600+ leading money managers tracked by Insider Monkey’s database, 42 were long DaVita at the end of September, an increase of 8 quarter-over-quarter.

Bridgewater also gained more enthusiasm in Q3 for some of the stocks it had already owned, as it boosted its positions in them during the third-quarter. It raised its stake in Intel Corporation (NASDAQ:INTC) by 258% to 660,539 shares worth $31.24 million, hiked its Gap Inc (NYSE:GPS) holding by 898% to 586,184 shares, valued at $16.91 million, and boosted it United States Steel Corporation (NYSE:X) share count by 116% to 1.09 million shares, building a position in the company that was valued at $33.3 million on September 30.

On the other hand, Ray Dalio and his team seemed to lose some faith for some of the companies in its portfolio, as it lowered its Oracle Corporation (NYSE:ORCL) stake by 95% to 39,614 shares and slashed its CVS Health Corp (NYSE:CVS) stake by 87% to 92,216 shares valued at $7.26 million.

Among the companies Bridgewater Associates decided to dump completely in the third quarter were PG&E Corporation (NYSE:PCG), with the fund saying goodbye to its position in the company that counted 775,654 shares worth around $33.01 million on June 30. It also dumped Kimberly Clark Corp (NYSE:KMB) during Q3, selling off its 208,490 shares that were valued at $21.96 million in the middle of 2018. Bridgewater Associates also sold out of its stake in Discovery, Inc. (NASDAQ:DISCA), which had counted 408,655 shares worth $11.24 million at the end of June. It is interesting that the fund dropped its position in Discovery, Inc. (NASDAQ:DISCA) when other hedge funds tracked by Insider Monkey’s database were becoming more bullish on it; 23 money managers were long the stock at the end of the third-quarter, which was up by 3 from the end of the second-quarter.

Disclosure: None