Billionaire Ray Dalio’s 10 Long-Term Stock Picks
In this article, we talk about 10 long-term stock picks in billionaire Ray Dalio's portfolio. If you want to see more stocks in this selection, check out Billionaire Ray Dalio's 5 Long-Term Stock Picks.
Raymond Thomas Dalio is an American billionaire investor and hedge fund manager, who has served as co-chief investment officer of Bridgewater Associates since 1985. A global macro investor for more than 50 years, Dalio ran his hedge fund for most of its 47 years, building it into the largest hedge fund in the world and the fifth most important private company in the US according to Fortune Magazine. Recently, however, Dalio stepped down from running Bridgewater Associates and announced to remain on the fund’s board and public research team.
Responsible for a number of investment innovations, including risk parity and alpha overlay, Dalio believes in taking profits on expensive stocks and then reinvesting. He calls this practice "rotating the portfolio." As of this November, the billionaire’s real-time net worth amounts to $19.1 billion, according to Forbes. Over the decades he has become a valued macroeconomic advisor to many policymakers around the world and was even named one of the “100 Most Influential People in the World” by TIME magazine.
One can also measure Dalio's investment expertise by the fact that the flagship Pure Alpha fund of Bridgewater Associates returned 32% during the first half of the year due to increased economic volatility, while the broader markets have been left struggling in the wake of global macroeconomic concerns. Some of the premier holdings of the Bridgewater portfolio include PepsiCo, Inc. (NASDAQ:PEP), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG).
Ray Dalio of Bridgewater Associates
Our Methodology
We scanned Bridgewater's Q3 portfolio and picked top 10 stocks that the fund has been holding over the past several quarters.
Billionaire Ray Dalio's 10 Long-Term Stock Picks
10. CVS Health Corporation (NYSE:CVS)
Bridgewater Associates' Stake Value: $293.7 million
Percentage of Bridgewater Associates’ 13F Portfolio: 1.48%
Number of Hedge Fund Holders: 67
CVS Health Corporation (NYSE:CVS) is an American healthcare company that owns CVS Pharmacy, a retail pharmacy chain; CVS Caremark, a pharmacy benefits manager; and Aetna, a health insurance provider, among many other brands. The company has been a part of Bridgewater Associates’ portfolio since the third quarter of 2012 when the hedge fund opened its position with shares worth $2.7 million. It represents 1.48% of billionaire Ray Dalio’s Q3 portfolio.
On November 21, Credit Suisse analyst A.J. Rice raised the price target on CVS Health Corporation (NYSE:CVS) to $125 from $117 and maintained an Outperform rating on the shares post the company's Healthcare Conference and Q3 inputs.
Of the 920 elite funds tracked by Insider Monkey, 67 hedge funds owned stakes in CVS Health Corporation (NYSE:CVS) in Q3 2022, compared with 65 in the previous quarter. The collective value of these stakes is over $2.14 billion.
In addition to PepsiCo, Inc. (NASDAQ:PEP), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), CVS Health Corporation (NYSE:CVS) is one of the stocks backed by billionaire Ray Dalio in Q3 2022.
Vltava Fund commented on CVS Health Corporation (NYSE:CVS) in a Q3 2022 investor letter, CVS Health Corporation (NYSE:CVS)
“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)
Bridgewater Associates' Stake Value: $298 million
Percentage of Bridgewater Associates’ 13F Portfolio: 1.5%
Number of Hedge Fund Holders: 62
Abbott Laboratories (NYSE:ABT) is an American multinational medical devices and health care company that operates through four segments – Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices. The company has been a part of Ray Dalio's portfolio since the third quarter of 2020. As of the third quarter of 2022, Bridgewater Associates increased its position in Abbott Laboratories (NYSE:ABT) by 11%. Ray Dalio's hedge fund owns over 3 million shares in the company, with a total value of over $298 million.
Barclays analyst Matt Miksic lowered the price target on Abbott Laboratories (NYSE:ABT) to $114 from $118 and kept an Overweight rating on the shares. According to the analyst, the market reaction to the company's Q3 results returned Abbott shares to early October levels. However, he finds Abbott's performance in Diabetes, EPD and Cardio Devices to be "encouraging."
According to Insider Monkey’s data, 62 hedge funds were bullish on Abbott Laboratories (NYSE:ABT) at the end of the third quarter of 2022, compared to 61 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 9.12 million shares worth $883.2 million.
Diamond Hill Capital made the following comment about Abbott Laboratories (NYSE:ABT) in its Q3 2022 investor letter:
“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)
Bridgewater Associates' Stake Value: $317.06 million
Percentage of Bridgewater Associates’ 13F Portfolio: 1.6%
Number of Hedge Fund Holders: 54
Pinduoduo Inc. (NASDAQ:PDD) is a Shanghai, China-based social e-commerce platform with a user base of 900 million globally. The company leverages technology to promote and enable the traditional agriculture industry. As of 2022, 16 million farmers have connected with the platform in China. At the close of Q3 2022, he reported holding $317.06 million worth of PDD shares. The billionaire added the company to his portfolio back in Q2 2019.
Morgan Stanley analyst Eddy Wang raised the price target on Pinduoduo Inc. (NASDAQ:PDD) to $77 from $65 and kept an Equal Weight rating on the shares after the company's Q3 results beat his estimates on both the top and bottom lines on November 29. Wang expects Pinduoduo's revenue growth momentum to carry well into Q4 based off an easier base, citing greater promotional activity during this year's Double 11.
According to Insider Monkey’s third quarter database, 54 hedge funds were long Pinduoduo Inc. (NASDAQ:PDD), compared to 41 funds in the prior quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 5.20 million shares valued at $326 million.
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)
Bridgewater Associates' Stake Value: $487.73 million
Percentage of Bridgewater Associates’ 13F Portfolio: 2.46%
Number of Hedge Fund Holders: 53
McDonald's Corporation (NYSE:MCD) is an American multinational fast food chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald. With the largest network of franchises around the world, it ranks as one of the most profitable corporations in the world. During Q3 2022, Bridgewater Associates increased its position in the company by 3% and owned over 2.1 million MCD shares worth $487.7 million. The firm first opened its position in McDonald’s Corporation (NYSE:MCD) during the first quarter of 2011 with shares worth over $4.6 million.
Earlier this October, RBC Capital analyst Christopher Carril raised the price target on McDonald's Corporation (NYSE:MCD) to $295 from $275 and kept an Outperform rating on the shares of the company. According to the analyst, McDonald's Corporation (NYSE:MCD) is placed in an enviable position, where its U.S. business is less reliant on unit growth or remodeling in the face of rising interest rates, and should continue to benefit from a largely rational promotional environment in the wake of the European and FX headwinds.
McDonald’s Corporation (NYSE:MCD) was a part of 53 hedge fund portfolios in Q3 2022, up from 50 in the previous quarter, according to Insider Monkey’s data. The stakes owned by these hedge funds are worth over $1.8 billion collectively.
6. Walmart Inc. (NYSE:WMT)
Bridgewater Associates' Stake Value: $522.69 million
Percentage of Bridgewater Associates’ 13F Portfolio: 2.64%
Number of Hedge Fund Holders: 68
Walmart Inc. (NYSE:WMT) is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores from the U.S. As of the end of Q3 2022, Bridgewater Associates owned over 4 million shares in Walmart Inc. (NYSE:WMT), with a total value of roughly $522.7 million. Walmart Inc. (NYSE:WMT) has been a part of Ray Dalio's portfolio since Q3 2020.
On November 17, Morgan Stanley analyst Simeon Gutman raised his price target on Walmart Inc. (NYSE:WMT) to $164 from $150 and maintained an Overweight rating on the shares based on increased estimates following the company's Q3 "beat & raise" and rolled forward his valuation framework to his fiscal year 2025 framework.
Among the hedge funds tracked by Insider Monkey, 68 funds were long Walmart Inc. (NYSE:WMT) at the end of September 2022, compared to 67 funds in the earlier quarter. The stakes owned by these hedge funds have a total value of over $3.78 billion. Among the hedge funds being tracked by Insider Monkey, Ken Fisher's Fisher Asset Management is a leading shareholder in Walmart Inc. (NYSE:WMT) with 8.1 million shares worth more than $1 billion.
The company represented 2.64% of billionaire Ray Dalio’s portfolio and is one of his most prominent holdings alongside PepsiCo, Inc. (NASDAQ:PEP), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG).
Leaven Partners mentioned Walmart Inc. (NYSE:WMT) in its Q3 2022 investor letter. Here is what the firm has to say:
“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%.”
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Disclosure. None. Billionaire Ray Dalio's 10 Long-Term Stock Picks is originally published on Insider Monkey.
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