Stocks that the Highest Paid Hedge Fund Manager Loves
Mike is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Who gets paid the most? Jim Simons? John Paulson. Nope. Ray Dalio is estimated to have made $3 billion in 2011, according to Forbes. His fund, Bridgewater, has about $120 billion under management. So what does he hold with all this cash? Bridgewater Associates, currently has about 260 positions in the market. Several mammoth positions and a lot of little ones.
Dalio has 42.3% of his total portfolio invested in a SPDR Standard & Poor’s 500 ETF (NYSEMKT: SPY). The SPY ETF has just scraped into the green, sitting at 0.78% above overall for the past year. However, Dalio is currently down 1.24% from his average purchase price. At least he knows this investment won't lose to the market.
The second and third largest positions add some more risk. Bridgewater has substantial investments in emerging markets ETFs. Dalio has 20.9% of his total portfolio invested with Vanguard MSCI Emerging Markets EFT (NYSEMKT: VWO). Unfortunately for Dalio, the Vanguard MSCI Emerging Markets ETF is currently sitting at -19.17% overall for the past year. Bridgewater is down from their average purchase price by only 1.81% though. The other emerging markets ETF is the iShares MSCI Emerging Market Index Fund.
Hewlett-Packard Company (NYSE: HPQ) made it way into Dalio's contrarian buy list as the stock has plummeted 45% in the past year. Following a infamous lawsuit with Oracle Corporation (one of Dalio's other holdings) over the ‘Itanium Microprocessor,’ and the refusal to settle by Oracle attorneys, Hewlett-Packard watched their stock price drop. As investors wonder whether this could be the end for this technology giant some big names are buying up the stock with Dalio. Investors like Michael Price and David Dreman purchasing new holdings as recently as March 31st. Perhaps HP can turn around… we’re sure Dalio hopes so.
Is Dalio long Windows 8 or the new "iPad killer"? Or does he just like the low valuation compared to the free cash flow? Bridgewater is invested in Microsoft (NASDAQ: MSFT). In Q1, Bridgewater increased their Microsoft investment by over 2000%. The stock is up about 7% so far in 2012 as Microsoft has been busy creating strategic partnerships, buying social networks, and showing off new products.
General Electric (NYSE: GE) is another big name in the portfolio of Bridgewater but they are disposing it as we speak. They sold off a large chunk in Q1 and we may see more come off their books as GE has no major developments lately. The stock performed well in 2012 so far, up about 6%, but Dalio may have better places for his cash.
Dalio may struggle to make that $3 billion this year given an average performance on the year, however, taking typical hedge fund fees on the $120 billion in assets can't be that bad in an average year. Unlike many finance experts, Dalio is definitely long on the World economy with his massive S&P 500 bet and his investments in the emerging markets. I think we'll have to side with the hedge fund billionaire on this one.
mthiessen has no positions in the stocks mentioned above. The Motley Fool owns shares of Microsoft. Motley Fool newsletter services recommend Microsoft. 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.If you have questions about this post or the Fool’s blog network, click here for information.