Every quarter, many money managers have to disclose what they've bought and sold via "13F" filings. Their latest moves can shine a bright light on smart stock picks.
Today let's look at Bridgewater Associates, representing the world's largest hedge fund -- and, in 2010 and 2011, the best-performing hedge fund, as well. Bridgewater was founded by Ray Dalio, who focuses on macroeconomic factors as he makes his investment decisions -- factors such as inflation, currency exchange rates, and GDP growth. He's clearly rather skilled, as the size of Bridgewater attests.
It can be hard to find sufficiently promising places to park your money, when you have so many billions to invest, but Bridgewater partly solves that problem with index funds, recently holding about 37% of its value in the S&P 500 SDPR ETF and 23% in the Vanguard Emerging Markets Stock ETF. The overall portfolio value, as of June 30, 2012, was $6.7 billion.
Interesting developments
So what does Bridgewater Associates' latest quarterly 13F filing tell us? Here are a few interesting details:
New holdings include Cliffs Natural Resources (NYSE: CLF) and PotashCorp (NYSE: POT). These seem to be bets on the global economy recovering, as Cliffs provides iron ore and coal necessary for manufacturing and energy, and PotashCorp is a fertilizer giant that is able to help farmers up their yields. Low prices have dogged Cliffs, but it's attractively valued, and as China's demand grows and the auto industry (and others) needs lots of steel, its prospects seem good. Catalysts for PotashCorp include drought-influenced, record-high, grain prices and some deteriorating soil conditions which will likely require fertilizer infusions.
Among holdings in which Bridgewater Associates increased its stake is semiconductor fabrication equipment supplier Applied Materials (Nasdaq: AMAT), another bet on the recovery of manufacturing. It could be a good bet for patient investors, recently yielding a 3.4% dividend, which it has been increasing regularly. The company is also planning to buy back billions of dollars of its own shares, boosting the value of remaining shares.
Bridgewater Associates reduced its stake in a lot of companies, including Broadcom (Nasdaq: BRCM). The company has been quite successful lately, providing connectivity chips for smartphones and other devices which are experiencing explosive growth. It's also expanding via some promising acquisitions. Some worry about its dependence on just a few companies, though. Apple, for example, provides almost a quarter of its revenue.
Finally, Bridgewater Associates unloaded plenty of companies, such as Qualcomm (Nasdaq: QCOM). The stock has been doing well, rising some 27% over the past year as the company supplied many millions of iDevices and Android devices with its LTE chip technology. The company experienced a big bump, though, when supply shortages at Taiwan Semiconductor slowed production.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing, and 13-F forms can be great places to find intriguing candidates for our portfolios.
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