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Ray Dalio Bets on Telecom and Miner in Top First-Quarter Picks
Posted by: Holly LaFon (IP Logged)
Date: May 16, 2012 04:44PM
Ray Dalio’s Bridgewater Associates, the world’s largest and best-performing hedge fund and a macro firm, added 71 new stocks to its portfolio in the first quarter of 2012. The largest of the firm’s new buys are: Verizon Communications (VZ), Qualcomm Inc. (QCOM), AT&T (T), Royal Bank Canada (RY) and Newmont Mining (NEM).
The biggest trend in Dalio’s top stock picks is their connection to 4G and smart phone growth in telecommunications, except for the fifth largest, a miner.
Verizon Communications (VZ)
Bridgewater bought 451,400 shares of Verizon at an average price of $39.
Verizon Communications, formed by the merger of Bell Atlantic and GTE, is one of the world's providers of high-growth communications services. Verizon Comm has a market cap of $116.72 billion; its shares were traded at around $40.97 with a P/E ratio of 18.4 and P/S ratio of 1.1. The dividend yield of Verizon Comm stocks is 4.9%. Verizon Comm had an annual average earnings growth of 2.3% over the past 10 years. GuruFocus rated Verizon Comm the business predictability rank of 4-star.
In the first quarter, Verizon reported 4.6% quarter over quarter revenue growth and 15.7% earnings per share growth, driven by strong demand for its FiOS services and strategic services. The company added 193,000 net new FiOS Internet connections and 180,000 net new FiOS video connections in the quarter. Revenues grew year over year across all strategic areas: wireless services, wireless data, FiOS and strategic services.
Qualcomm Inc. (QCOM)
Bridgewater bought 226,465 of new holding Qualcomm Inc. at an average of $62 per share.
Qualcomm Inc. develops and delivers innovative digital wireless communications products and services based on the company's CDMA digital technology. Qualcomm Inc has a market cap of $104.63 billion; its shares were traded at around $59.38 with a P/E ratio of 20.2 and P/S ratio of 7. The dividend yield of Qualcomm Inc stocks is 1.4%. Qualcomm Inc. had an annual average earnings growth of 18.2% over the past 10 years. GuruFocus rated Qualcomm Inc. the business predictability rank of 3.5-star.
Qualcomm in its second quarter ended March 25, 2012, reported record quarterly revenue of $4.9 billion, up 28% year over year, and record earnings per share of $1.28, up 123% year over year. The record results were driven by demand for 3G and 4G-enable devices. In the December quarter, estimated 3G and 4G device shipments were approximately 239 to 243 million units, at an average price of approximately $211 to $217 per unit, compared to 191 million to 195 million the prior quarter. Device sales were up 29% year over year and 25% sequentially.
Bridgewater bought 460,100 shares of AT&T at an average price of $31.
AT&T Inc. is a premier communications holding company. AT&T Inc. has a market cap of $199.17 billion; its shares were traded at around $33.28 with a P/E ratio of 15.1 and P/S ratio of 1.6. The dividend yield of AT&T Inc. stocks is 5.2%. AT&T Inc. had an annual average earnings growth of 3.3% over the past 10 years.
In AT&T’s first quarter, the company reported diluted EPS of $0.60 compared to $0.57 in the prior-year period, and revenues increased 1.8% to $31.8 billion, compared to the prior-year period. Wireless, wireline, data and managed services accounted for 78% of AT%T’s total revenue in the quarter, and grew 6.2%, compared to year-ago quarter. The largest increase was seen in consumer U-verse (TV and high speed internet) revenues, which increased 38.2%, followed by wireless data revenues which grew 19.9% and strategic business services revenues which grew 19%.
AT&T also sold a first-quarter record 5.5 million smartphones. Approximately 30 percent of its postpaid smartphone subscribers were on 4G-capable devices.
Royal Bank Canada (RY)
Bridgewater bought 248,000 shares of Royal Bank of Canada (RY) at an average of $55.
Royal Bank of Canada is Canada’s largest bank and operates under the master brand name of RBC. Royal Bank of Canada has a market cap of $77.61 billion; its shares were traded at around $52.36 with a P/E ratio of 12.3 and P/S ratio of 2.2. The dividend yield of Royal Bank of Canada stocks is 4.2%. Royal Bank of Canada had an annual average earnings growth of 15.1% over the past 10 years.
In the bank’s first quarter ended Jan. 31, 2012, it reported almost $1.9 billion earnings, down 6% from the prior-year quarter, and return on common equity of 20%, down from 24.4% in the prior-year quarter. The bank also announced a 6% increase in its quarterly dividend on March 1, 2012. Net income in its Canadian Banking sector reported record net income of $994 million, increased 5%, driven by growth in home equity products, personal and business deposits and business loans.
Dalio’s Royal Bank Canada investment also has a tie to the mobile industry. It is one of the six largest lenders in Canada to agree to voluntary guidelines to develop mobile payments in Canada that will allow Canadians to pay for things with their mobile devices. “While voluntary, the financial institutions that developed the guidelines are committed to these principles in the mobile market, and these guidelines are intended to create a path to help all market participants move forward in developing mobile payment solutions,” the Canadian Bankers Association said in a statement.
Newmont Mining (NEM)
Bridgewater bought 279,106 shares of Newmont Mining (NEM) at an average of $59. The stock is down 27.5% year to open at $43.37 on Wednesday, near its 52-week low of $43.23.
Newmont Mining Corp., the largest gold producer in the U.S., is engaged in the production of gold, the exploration for gold and the acquisition and development of gold properties worldwide. Newmont Mining has a market cap of $22.24 billion; its shares were traded at around $43.51 with a P/E ratio of 10.1 and P/S ratio of 2.2. The dividend yield of Newmont Mining stocks is 3.1%. Newmont Mining had an annual average earnings growth of 12.7% over the past 10 years. GuruFocus rated Newmont Mining the business predictability rank of 2.5-star.
Newmont’s stock price began declining in February when it announced a fourth-quarter loss of $1.03 billion due to a $1.61 billion writedown of its Hope Bay project in Canada. Net income the previous year was $812 million. The same day, it announced a 6% increase in its gold reserves to a record 98.8 million ounces and a record 9.7 billion pounds of copper in 2011.
In Newmont’s first quarter, it reported net income of $517 million, compared with $513 million the prior-year quarter. Consolidated revenue increased 9% to $2.7 billion, and gold operating margin expanded 29%, slightly more than the 22% increase in the average price of gold.
Find Ray Dalio’s Bridgewater Associates equity portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Ray Dalio.
Guru Discussed: Ray Dalio: Current Portfolio, Stock Picks
Stocks Discussed: VZ, QCOM, T, RY, NEM,