Ray Dalio (Trades, Portfolio), founder of Bridgewater Associates, disclosed this week the hedge fund’s top five new buys during the third quarter were General Electric Co. (GE, Financial), PVH Corp. (PVH, Financial), DaVita Inc. (DVA, Financial), Wynn Resorts Ltd. (WYNN, Financial) and Macy’s Inc. (M, Financial).
Dalio, who stepped down as co-CEO of Bridgewater on April 15, 2017, listed several life principles in his book, “Principles”: working for what he wanted, not for what others want him to do; coming with the best independent options and stress-testing them; avoiding overconfidence and wrestling with reality.
General Electric
Having sold 1,470,532 shares during the second quarter, Bridgewater invested in 2,012,662 shares of GE, a Boston-based diversified industrials company. Shares of GE averaged $13.92 during the second quarter and $12.86 during the third quarter.
GE and Baker Hughes, a GE Co. (BHGE, Financial) announced on Tuesday the companies entered into a series of long-term agreements that amend the commercial and technological relationships between the two companies. GE CEO Lawrence Culp Jr. said the industrial conglomerate announced its “intent to pursue an orderly separation from BHGE” and that the new agreements accelerate that plan that mutually benefits both companies and their shareholders. Such agreements focus on the long-term collaboration on critical rotating equipment: Culp added the continued commercial relationship expects to strengthen both companies’ abilities to “deliver high-value technologies and solutions to customers around the world.”
Shares of GE rose 7.76% during the day, closing with “the best day since April 2015” according to CNBC columnist Michael Sheetz. GuruFocus ranks GE’s profitability 6 out of 10: even though net profit margins underperform 89% of global competitors, GE’s three-year revenue growth rate of 6.40% outperforms 66% of global diversified industrial companies.
Richard Pzena (Trades, Portfolio)’s Pzena Investment Management Inc. (PZN, Financial) continued expanding its position in GE, adding 16,297,449 shares. Other gurus betting on a turnaround at GE include Andreas Halvorsen (Trades, Portfolio), Mason Hawkins (Trades, Portfolio)’ Southeastern Asset Management and Bill Nygren (Trades, Portfolio).
PVH Corp.
Bridgewater invested in 118,228 shares of PVH Corp., the parent company for well-known brands like Tommy Hilfiger and Calvin Klein. Shares averaged $147.89 during the quarter.
GuruFocus ranks the New York-based apparel manufacturer’s profitability 8 out of 10 on several positive investing signs, which include a strong Piotroski F-score of 8 and profit margins that outperform approximately 70% of global competitors. Additionally, the company’s business predictability ranks three stars out of five on consistent revenue growth over the past 10 years.
DaVita
Bridgewater invested in 190,154 shares of DaVita, a major kidney dialysis provider. Shares averaged $70.70 during the quarter.
Although shares of DaVita gained on last week’s midterm vote defeating Proposition 8, the stock price tumbled on management’s comments regarding lower kidney care operating income for the full year. Shares of DaVita traded 5.47% lower from Monday’s close.
Despite the lower share price, GuruFocus still ranks DaVita’s profitability 9 out of 10 on several positive investing signs, which include a strong Piotroski F-score of 8. Positive indicators contributing to the score include increasing returns on assets, lower leverage, higher current ratios and asset turnover year over year.
Wynn Resorts
Bridgewater invested in 78,808 shares of Wynn Resorts, a major casino resort operator. Shares of Wynn averaged $148.50 during the quarter.
GuruFocus ranks the Las Vegas, Nevada-based company’s profitability 7 out of 10: even though profit margins have declined over the past five years, Wynn’s 54.41% return on equity outperforms 97% of global competitors.
Steve Mandel (Trades, Portfolio) increased his Wynn holding to 5,955,497 shares on Sept. 10 according to GuruFocus real-time picks.
Macy’s
Bridgewater invested in 243,849 shares of Macy’s, a major department store chain. Shares averaged $37.21 during the quarter.
GuruFocus ranks the Cincinnati-based retailer’s profitability 7 out of 10: Macy’s operating margins still outperform 68% of global competitors even though margins have contracted approximately 10% per year over the past five years. Additionally, the company has a strong Piotroski F-score of 8 and a return on equity that outperforms 93% of global competitors.
Disclosure: No positions.
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