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James Li
James Li
Articles (1282)  | Author's Website |

Top 5 Buys of Ray Dalio’s Bridgewater in the 1st Quarter

The $165 billion hedge fund releases portfolio in a coronavirus-driven landscape

Bridgewater Associates, the $165 billion hedge fund founded by Ray Dalio (Trades, Portfolio), disclosed this week that its top five buys for the first quarter were McDonald’s Corp. (NYSE:MCD), UnitedHealth Group Inc. (NYSE:UNH), Lockheed Martin Corp. (NYSE:LMT), Phillip Morris International Inc. (NYSE:PM) and Abbott Laboratories (NYSE:ABT).

Dalio, co-chief investment officer of Bridgewater, started the Greenwich, Connecticut-based fund in 1975. According to his LinkedIn profile, Dalio invented “industry-changing” approaches to investing, which include the invention of risk parity, currency overlay and portable alpha. The Bridgewater co-chief investment officer listed several key principles in his book “Principles: Life and Work,” including working for what he wanted, coming up with the best independent opinions, avoiding overconfidence and wrestling with reality.

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In light of the coronavirus outbreak, with global casualties surpassing 300,000 as of Thursday according to John Hopkins University statistics, Dalio started in March a new series called “The Changing World Order.” According to the book’s website, Dalio wrote in the introduction that while the times ahead might be “radically different” from the times we have experienced so far, he believes that the times ahead might be like “many other times in history.” He added that he studied over the past 18 months “the rises and declines of empires, their reserve currencies, and their markets.”

As of first quarter-end, Bridgewater’s $5 billion equity portfolio contains 400 stocks, of which 179 represent new holdings. The top three sectors in terms of weight are consumer cyclical, financial services and industrials, with weights of 4.03%, 2.69% and 1.91%.

McDonald’s

Bridgewater purchased 32,541 shares of McDonald’s, giving the position 0.11% weight in the equity portfolio. Shares averaged $197.58 during the first quarter.

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GuruFocus ranks the Chicago-based fast-food giant’s profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and operating margins that have increased approximately 9.10% per year on average over the past five years and are outperforming over 98% of global competitors.

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UnitedHealth Group

Bridgewater purchased 21,977 shares of UnitedHealth Group, giving the holding  0.11% weight in the equity portfolio. Shares averaged $276.19 during the first quarter.

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GuruFocus ranks the Minnetonka, Minnesota-based health care plan provider’s profitability 9 out of 10 on several positive investing signs, which include expanding operating margins, a five-star business predictability rank and a Piotroski F-score of a perfect 9 out of 9.

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Lockheed Martin

Bridgewater purchased 15,345 shares of Lockheed Martin, giving the position 0.10% weight in the equity portfolio. Shares averaged $394.42 during the first quarter.

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GuruFocus ranks the Bethesda, Maryland-based defense contractor’s profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8, expanding operating margins and consistent revenue growth over the past 10 years, as suggested by its three-star business predictability rank.

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Phillip Morris

Bridgewater purchased 67,447 shares of Phillip Morris, giving the holding 0.10% weight in the equity portfolio. Shares averaged $82.53 during the first quarter.

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GuruFocus ranks the New York-based tobacco company’s profitability 8 out of 10 on the back of operating margins that outperform over 88% of global competitors despite contracting over the past five years. Additionally, Phillip Morris has a high Piotroski F-score of 7.

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Abbott

Bridgewater purchased 54,586 shares of Abbott, giving the position 0.09% weight in the equity portfolio. Shares averaged $83.67 during the first quarter.

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GuruFocus ranks the Abbott Park, Illinois-based medical device company’s profitability 7 out of 10 on the heels of a high Piotroski F-score of 7 and operating margins that outperform over 77% of global competitors despite contracting over the past five years.

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Disclosure: The author has no positions in the stocks mentioned. The equity portfolio considers Bridgewater’s holdings in stock equities and does not include the approximately-83% weight in exchange-traded-fund holdings. You can view Bridgewater’s holdings in ETF’s here.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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