Ray Dalio (Trades, Portfolio) founded the Connecticut-based hedge fund Bridgewater Associates in 1975. Today, it manages approximately $169 billion in assets for a variety of institutional clients, including governments and central banks, university endowments and charitable foundations.
During the first quarter, Dalio purchased 90 new stocks; the portfolio now contains 328 stocks with a quarter-over-quarter turnover of 7%.
The vast majority of the portfolio (87.2%) is invested in ETFs and options. This is followed by the technology sector at 3.4%, and energy at 2.3%.
The following are the five largest new buys during Q1.
Dalio purchased 577,774 shares of Coca-Cola for an average price of $41.82 per share. He had sold out of the stock in the previous quarter. The graph below shows Dalio’s holding history.
Coca-Cola currently trades at $41.52 with a P/E ratio of 26.4 and P/S ratio of 4. Over the past five years, the beverage company’s revenue growth was 9.6%, while the EBIT growth rate was 5.3%.
GuruFocus rates Coca-Cola’s business predictability as 3 out of 5 stars. The DCF calculator estimates a fair value of $19.96, which gives a -108% margin of safety.
Cisco Systems (CSCO, Financial)
Dalio bought 503,980 shares of Cisco, which traded for an average price of $28.15 during the quarter.
Cisco’s stock has risen 21% over the past year and now trades at $29.48. The current P/E ratio is 17.7 and the P/S ratio is 3.18. The DCF calculator estimates the stock is overvalued with a margin of safety of -34%, with a fair value of $22.02.
Revenue growth over the past five years was 8.2%, while EBIT grew by 8.6% over the same time period.
The dividend yield is 2.64%, while the payout ratio is 45%.
Dalio also purchased 146,600 shares of Target, for an average price of $77.24 per share. He had sold out of a previous holding in Q1 2013.
Target’s stock has increased 35% over the past five years, and now trades at $77.68 with a forward P/E of 17.21 and P/S ratio of 0.69.
In 2014, Target reported a loss in net income of $-1,636 million, the first loss in the past 10 years. EBIT per share in 2014 was $7.08, down from $8.06 the year before.
The current dividend yield is 2.53%, and the payout ratio is 50%.
CenturyLink Inc (CTL, Financial)
He bought 305,677 shares of CenturyLink, which traded for an average price of $37.34 during the quarter. CenturyLink is an integrated communications company whose products include local and long-distance broadband, managed hosting, Ethernet, etc.
The stock currently trades at $34.68 with a P/E ratio of 25.7 and P/S ratio of 1.09. Over the past five years, revenue growth was 5.8%. However, the company’s EBIT growth declined 13% over the same time frame.
In 2014, the company reported net income of $772 million, up from $-239 million the year before.
The current dividend yield is 6.26%, while the payout ratio is a high 161%.
Dalio’s fifth largest purchase during the quarter was 239,237 shares of Cree for an average price of $36.11 per share.
Cree manufactures LED products, lighting products, and semiconductor products for power and radio-frequency applications. The stock declined 36% over the past year and is currently priced at $30.97, with a P/E ratio of 49.1 and P/S ratio of 2.08.
Revenue grew by 15% over the past five years, while EBIT grew by 5.3%. In 2014, Cree reported net income of $124 million, up from $87 million the year before.
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