Ray Dalio (Trades, Portfolio), author of best-seller “Principles,” disclosed on Tuesday that his $165 billion hedge fund’s top six buys for the second quarter were Cummins Inc. (CMI, Financial), Applied Materials Inc. (AMAT, Financial), Alibaba Group Holding Ltd. (BABA, Financial), Bristol-Myers Squibb Co. (BMY, Financial), Walmart Inc. (WMT, Financial) and Johnson & Johnson (JNJ, Financial).
Dalio’s Bridgewater Associates follows several principles as outlined in the book, including coming up with the best independent opinions and “wrestling with reality, experiencing the results of [his] decisions and reflecting on” ways for improvement. The success of Bridgewater, which claims approximately 13% annual returns after fees, made the former co-CEO the 67th richest person in the world for the year according to Forbes.
Cummins
Bridgewater invested in 235,261 shares of Cummins for an average price of $149.79 per share, dedicating 0.31% of the equity portfolio to the holding.
Cummins, a diversified industrials company, designs and manufactures diesel and natural gas engines. GuruFocus ranks the company’s profitability 7 out of 10 and lists four positive investing signs, including consistent revenue growth, a price-sales ratio near a two-year low and a dividend yield near a two-year high. Additionally, Cummins’ business predictability ranks three stars out of five.
Chuck Royce (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also invested in Cummins during the quarter.
Applied Materials
Dalio’s fund invested in 551,724 shares of Applied Materials for an average price of $51.56 per share, giving the position 0.25% portfolio weight.
Applied Materials supplies various semiconductor manufacturing equipment, including etching, chemical mechanical polishing and wafer- and reticle-inspection systems. The company’s profitability ranks 8 out of 10 on several positive investing signs, including profit margins that are near a 10-year high of 28.17% and outperforming 94% of global competitors.
Richard Snow (Trades, Portfolio) also invested in Applied Materials during the quarter.
Alibaba
Bridgewater invested in 84,629 shares of Alibaba for an average price of $190.49 per share, dedicating 0.16% of the equity portfolio to the position.
Alibaba announced in an Aug. 9 press release that it rolled out its “88 VIP” membership, a new tier within the company’s customer-loyalty program launched last year for Tmall and Taobao marketplace customers. GuruFocus ranks the Chinese online retail giant’s profitability 8 out of 10 on several factors, including consistent revenue growth and profit margins that outperform 98% of global competitors. Alibaba’s business predictability ranks a solid 3.5 stars out of five.
Dalio’s fund joins several gurus that have expanded their holdings in Alibaba, including Chris Davis (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Chase Coleman (Trades, Portfolio)’s Tiger Global Management and Julian Robertson (Trades, Portfolio)’s Tiger Management.
Bristol-Myers Squibb
Bridgewater invested in 273,634 shares of Bristol-Myers Squibb for an average price of $54.03 per share, dedicating 0.15% of the equity portfolio to the position.
Bristol-Myers Squibb engages in the discovery, development and marketing of drugs for various indications, especially in immune-oncology. GuruFocus ranks the company’s financial strength and profitability 7 out of 10 on several factors, including a solid Piotroski F-score of 6, a strong Altman Z-score of 5.5 and a Joel Greenblatt (Trades, Portfolio) return on capital that outperforms 95% of global competitors.
Walmart
Bridgewater invested in 168,219 shares of Walmart for an average price of $85.33, giving the position 0.14% portfolio weight.
One of the largest retailers in the world, Walmart generates over $500 billion in annual revenue through approximately 11,700 stores. GuruFocus ranks the Bentonville, Arkansas-based retailer’s profitability 6 out of 10 primarily due to operating margins and returns on equity outperforming over 63% of global competitors.
Johnson & Johnson
Dalio’s fund invested in 109,950 shares of Johnson & Johnson for an average price of $124.84 per share, dedicating 0.13% of the equity portfolio to the position.
Johnson & Johnson engages in the research, development and manufacturing of a wide variety of health care products. GuruFocus ranks the company’s profitability 7 out of 10 on several positive investing signs, including expanding operating margins, consistent revenue growth and a strong Piotroski F-score of 7.
Disclosure: No positions.
