Billionaire Ray Dalio’s New Stock Picks for 2013

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During his tenure as CEO of Bridgewater Associates, Ray Dalio was required by the SEC to disclose his fund’s positions every quarter. Although he has since stepped down (though is still contributing as a mentor), the fund continues to meet these filing obligations. The public documents can be accessed and researched by anyone, and we have done our own due diligence to see how the fund manipulated its $9.8 billion in capital this past quarter. Part of our analysis has led us to find a small-cap strategy that has enabled investors to outperform the market by 18 percentage points per year (read more here). See below for our take on this giant hedge fund’s stock picks as outlined by its 13F.

Procter & Gamble Co. (NYSE: PG) was the largest of the fifty-one new purchases by Bridgewater. The company has faced some slow top-line growth and a weaker position amongst competitors in the past few years. However, PG beat the market by a few percentage points looking back twelve months, and the high dividend yield of 2.9% added income to investors’ pockets along the way. The company currently has plans to increase its footprint abroad by investing over a billion dollars in China in the next five years. Billionaire Ken Fisher of Fisher Asset Management has nearly half a billion dollars invested in PG.

The Goodyear Tire & Rubber Company (NASDAQ: GT) received about $15.7 million of the fund’s assets under management, making it the second largest purchase of Bridgewater’s last quarter. The tire manufacturer gave a mostly flat performance for 2012, but has depreciated by 6.5% since the start of this year. Analysts on Wall Street are giving GT bullish valuations a year out, allowing a possible growth of 28% if their mean price targets materialize. The company announced last month that it will be closing a tire plant in France; workers reacted by setting off flares and throwing paint bombs at the plant. Steven Cohen of SAC Capital Advisors pushed his investment up to $95 million in the stock last quarter (see his top plays here).

Intel Corp. (NASDAQ: INTC) has been giving great earnings performance after great earnings performance lately, with its most recent announcement in January of this year leading to a 6.7% beat over analysts’ predictions. Intel saw a slight decline in popularity amongst the hedge funds we track going into the end of the 2012 but still remains a moderate favorite, with more than 10% holding the tech giant. Intel continues to strike deals to make chips for clients like Cisco and Altera; talks have supposedly been held with Apple as well, but nothing definitive has been announced. Billionaire Daniel S. Och of OZ Management has an equity position in Intel that roughly matches Bridgewaters.

Marriot International (NYSE: MAR) received more attention from hedge funds this past quarter than in Q3 2012; funds like D. E. Shaw and Winton Capital Management initiated new positions in the hospitality company, as did Bridgewater. Marriot announced this week that it will assist Swedish furniture manufacturer Ikea in opening about 50 budget hotels across Europe in the next five years. This positive news is in addition to the year-over-year increases in earnings and revenue that came with Marriot’s quarterly earnings announcement last month. Billionaire Israel Englander of Millennium Management saw his position increase by 32% last quarter.

Finally, Medtronic Inc. (NYSE: MDT) rounds out our list of Bridgewater’s new purchases, receiving an allotment of $8.8 million from the fund, similar to Marriot. The $46 billion company manufactures devices used in medical therapy and serves hospitals, physicians, and patients globally. Medtronic’s most recent earnings announcement last month revealed an earnings beat and guidance that projected revenue growth in the range of 3%-4%. Income investors should take note of the 2.3% dividend yield. Billionaire Michael Hintze of CQS Cayman LP has a debt investment in Medtronic amounting to $84 million.

This article is written by Eric Winter and edited by Meena Krishnamsetty. InsiderMonkey has no position in any stocks mentioned. The Motley Fool recommends Intel and Procter & Gamble. The Motley Fool owns shares of Intel and Medtronic. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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