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Ray Dalio Buys Berkshire, BCE and Microchip Technology
Posted by: Holly LaFon (IP Logged)
Date: November 13, 2012 05:24PM
Ray Dalio is the founder of last year’s largest and most successful hedge fund, Bridgewater Associates, and he just updated his third quarter portfolio. The largest new additions in the quarter were Berkshire Hathaway (BRK.B), BCE Inc. (BCE) and Microchip Technology (MCHP).
Berkshire Hathaway (BRK.B)
Dalio bought 238,397 Berkshire Hathaway B shares for $85 per share in the third quarter. He had exited a position in the company in the second quarter.
Berkshire Hathaway, the mega-conglomerate owned by Warren Buffett, has seen its stock rise almost 12% in the past year and decline 3% over the past five years.
In the first nine months of 2012, Berkshire Hathaway reported operating earnings increased to $9.78 billion from $8.11 billion a year previously, and net earnings rose to $10.27 billion from $7.21 billion a year ago. Its book value increased by 11.9% since year end to $111,718 per Class A equivalent share, and insurance float increased to approximately $72 billion.
Berkshire’s P/E at 16.3 is close to a 10-year low, it’s P/S at 1.9 is close to a three-year high and its price at $85.19 per share is close to a three-year high.
BCE Inc. (BCE)
Dalio bought 436,937 shares of BCE for $43 each on average.
The largest communications company in Canada, BCE offers a comprehensive suite of broadband communication services to residential and business customers. Its stock gained 2% year to date.
The company’s third quarter revenue according to results reported on Nov. 1 increased 1.8% year over year, driven by revenue growth at Bell Wireless and Bell Media, and moderated by a decline at Bell Wireline. EBITDA grew 5.2% and free cash flow increased 7%.
Net earnings shrank to $569 million from $642 million a year ago; earnings per share were $0.74 from $0.83 a year ago, due primarily to lower income tax expense in the third quarter and “the favorable resolution of tax matters.”
“We performed well across the business in Q3, posting another sound quarter of EBITDA growth and margin expansion, driven by exceptional wireless and media results as well as substantial net earnings and free cash flow consistent with our plan. Our 2012 financial plan remains on track as we reconfirm today all our Bell and BCE guidance targets for the year,” said Siim Vanaselja, Chief Financial Officer for Bell and BCE. “Our continued strong free cash flow generation, which year to date has grown 7% over last year, has not only enabled significant strategic investment in Bell’s broadband wireline and wireless platforms, but also amply supports the recent 10-cent annualized increase in BCE’s common share dividend, effective with the dividend payment of October 15.”
BCE’s P/E ratio at 12.8 was close to a 10-year low, while its P/B ratio at 2.24 is close to a three-year high, P/S ratio at 1.7 is close to a three-year high and price at $42.55 is close to a 10-year high.
Microchip Technology (MCHP)
Dalio purchased 422,376 shares of Microchip Technology for $34 each on average.
Microchip Technology is a semiconductor company whose stock has declined 18% year to date.
Its second quarter of fiscal 2013 ended Sept. 30 produced record net sales including contributions from the acquisition of SMSC on Aug. 2. Net sales increased 12.5% year over year to $383.3 million. It also had a GAPP net loss of $21.2 million, or $0.11 per share, declined from $79.3 million or $0.40 per diluted shares a year previously.
The results were slightly lower than they expected due to weak European markets and economy in U.S. and China. The company expects to continue to see weakness in its SMSC business and microcontroller, analog and memory businesses due to the weak economic and business environments.
Microchip’s price at $30.59 is close to a two year low, its P/E at 19.2 is close to a three-year low and P/B at 2.94 is close to a three-year low.
Get updated on more of Ray Dalio’s third quarter stock picks at his portfolio here. Also check out the undervalued stocks, top growth companies and high yield stocks of Ray Dalio.