Bridgewater Associates, which was founded by Ray Dalio (Trades, Portfolio), has revealed its portfolio for the fourth quarter of 2020. Major trades include a large reduction in the SSgA SPDR Gold Shares (GLD, Financial) holding and additions to the Walmart Inc. (WMT, Financial), Procter & Gamble Co. (PG), Coca-Cola Co. (KO, Financial) and BTC iShares Core MSCI Emerging Markets ETF (IEMG, Financial) holdings.
The Greenwich, Connecticut-based hedge fund invests based up on the principles laid out by Dalio. These include coming up with the best independent options to support his goals, stress-testing these options with challenges from others, being wary of overconfidence and experiencing the reality of the results generated by the decisions made over time.
Portfolio overview
At the end of the fourth quarter, the portfolio contained 525 stocks, with 169 new holdings. It was valued at $11.56 billion and has seen a turnover rate of 29%. Top holdings include SSGA SPDR S&P 500 (SPY, Financial), Vanguard FTSE Emerging Markets ETF (VWO, Financial), SSfA SPDR Gold Shares, Walmart and Procter & Gamble.
By weight, the top three represented sectors are consumer defensive (23.71%), consumer cyclical (13.09%) and health care (9.75%).
SSgA SPDR Gold Shares
The hedge fund slashed itsholding in SSgA SPDR Gold Shares (GLD, Financial) by 45.35% with the sale of 2.47 million shares. During the quarter, the shares of the exchange-traded fund traded at an average price of $176.05. GuruFocus estimates the total gain of the holding at 29.76% and the sale had an impact on the portfolio of -5.28%.
On Feb. 18, the ETF was trading at $166.34 per share. Year to date, it is down 6.74% compared to a 2020 total return of 24.81%.
Walmart
The fund boosted its holding in Walmart (WMT, Financial) during the fourth quarter. The holding grew by 120.82% with the purchase of 1.68 million shares that traded at an average price of $145.73 during the quarter. Overall, the purchase had a 2.10% impact on the portfolio and GuruFocus estimates the total loss of the holding at 0.72%.
America's largest retailer by sales, Walmart operates over 11,500 stores under 56 banners, selling a variety of general merchandise and grocery items. Its home market accounted for 77% of sales in fiscal 2020, with Mexico and Central America (6%), the United Kingdom (6%) and Canada (4%) its largest external markets. In the United States, around 56% of sales come from grocery, 34% from general merchandise and 10% from health and wellness items. The company operates several e-commerce properties apart from its eponymous site, including Flipkart and shoes.com (it also owns a roughly 10% stake in Chinese online retailer JD.com). Combined, e-commerce accounted for about 7% of fiscal 2020 sales.
As of Feb. 18, the stock was trading at $138.51 per share with a market cap of $392.01 billion. According to the GF Value Line, the stock is trading at a modestly overvalued rating.
GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 2 out of 10. There is currently one severe warning sign issued for a declining operating margin percentage. The company's cash-to-debt ratio of 0.21 ranks it lower than 64.58% of industry competitors despite it being higher than the company's median ratio.
Procter & Gamble
The fund also doubled down on their Procter & Gamble (PG) holding with a 119.95% boost in shares. The additional 1.46 million shares added to the portfolio traded at an average price of $139.77 during the quarter. GuruFocus estimates the fund has lost a total of 4.29% on the holding and the purchase had a 1.77% impact on the portfolio overall.
Since its founding in 1837, Procter & Gamble has become one of the world's largest consumer product manufacturers, generating more than $70 billion in annual sales. It operates with a lineup of leading brands, including 21 that generate more than $1 billion in annual global sales such as Tide laundry detergent, Charmin toilet paper, Pantene shampoo and Pampers diapers. P&G sold its last remaining food brand, Pringles, to Kellogg in 2012. Sales outside its home turf represent around 55% of the company's consolidated total, with around one-third coming from emerging markets.
The stock was trading at $129.60 per share with a market cap of $319.14 billion on Feb. 18. The shares are trading at fair value according to the GF Value Line.
GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 3 out of 10. There are currently no severe warning signs issued for the company. The company has maintained a solid return on invested capital over the years that has fully supported the weighted average cost of capital and has allowed the company to grow value over time.
Coca-Cola
The Coca-Cola (KO, Financial) position more than doubled in size during the quarter as well. The fund added 123.03% to the holding with the purchase of 2.49 million shares. During the quarter, the shares traded at an average price of $51.75. Overall, the purchase had an impact of 1.19% on the portfolio and GuruFocus estimates the total gain of the holding at 0.91%.
Coca-Cola is the largest nonalcoholic beverage entity in the world, owning and marketing some of the leading carbonated beverage brands, such as Coke, Fanta and Sprite, as well as non-sparkling brands, such as Minute Maid, Georgia Coffee and Glaceau. Coca-Cola recently expanded its presence in the hot-beverage market through its acquisition of Costa, a leading coffee company in the United Kingdom. The firm generates most of its revenue internationally.
On Feb. 18, the stock was trading at $50.72 per share with a market cap of $218.07 billion. According to the GF Value Line, the stock is trading at fair value.
GuruFocus gives the company a financial strength rating of 5 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 2 out of 10. There is currently one severe warning sign issued for declining revenue per share. The company rounded out 2020 with rising net income and free cash flow that was able to support dividend payouts.
BTC iShares Core MSCI Emerging Markets ETF
Rounding out the top five trades the hedge fund leaned into its BTCiShares Core MSCI Emerging Markets ETF (IEMG, Financial) holding. It purchased an additional 2.22 million shares to add 70.32% to the holding. The shares traded at an average price of $57.18 during the quarter. GuruFocus estimates the fund has gained a total of 5.01% on the holding and the purchase had an overall impact of 1.19% on the equity portfolio.
As of Feb. 18, the ETF was trading at $68.49 per share. Year to date, it is up 11.94%.
Disclosure: Author owns no stocks mentioned.
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