Bridgewater Associates is the largest hedge fund in the world when it comes to assets under management. Founded by Ray Dalio in 1975, the fund's status as world's largest tells us two things: First, it has done enough to win the confidence of money managers. Second, any trades made by this behemoth are likely to move a given stock's price.
Over the course of the third quarter of this year, the fund sold or reduced positions in 234 stocks while adding only 87 different companies' shares to their portfolio. Of all those trades, three stood out as worthy of attention.
This company is one of North America's largest distributors of food. Take a trip to any grocery store or restaurant and you're likely to see a Sysco truck pulled up and delivering goods. Bridgewater added the company to its holdings over the past three months.
The previous quarter wasn't a particularly pleasant one for shareholders, as the company's stock fell 13% between mid-July and late August. The company, which is facing increased pressure from competitors like United Natural Foods that focus on the growing natural/organic market, reported an earnings decline of 15% in August.
Adding to the bad news was a story out of San Francisco that Sysco had been using storage lockers to hold perishable goods for hours without climate control. The story ballooned with the company admitting that it had used such practices across the country, but would be discontinuing its use immediately.
Apparently, Bridgewater believes the stock's hit was more than necessary and that once this bad news passes, Sysco has a solid enough market position to warrant an investment of roughly $12 million.
During the third quarter of 2013, Bridgewater bought roughly 170,000 shares of Disney worth about $11 million. Before this purchase, Bridgewater didn't own any shares of the company.
Though there hasn't been any earth-shattering news of note coming from Disney this year, the company's stock has enjoyed a healthy 40% return so far this year.
There are tons of moving parts that bring revenue in for the House of Mouse -- theme parks, toy sales, ABC, and ESPN, to name a few -- but Disney's imminent movie slate is what has caught the attention of investors. Within the next two years, it will release installments of Captain America, The Avengers, and Star Wars, among others. It will also be opening up a theme park in Shanghai that could prove lucrative.
Unlike Disney and Sysco, Bridgewater decided to part with all of its Monsanto shares -- worth somewhere in the ballpark of $17.5 million. The company -- a major agribusiness player that markets both pesticides as well as genetically modified seeds to farmers -- certainly hasn't been a public favorite, but that's not likely why Bridgewater parted ways.
Though it holds a 27% share of the global seed market and a 10% share of the global agrochemical market, Monsanto shareholders haven't had too much to cheer about lately. The stock is underperforming the broader market by about 10 percentage points in 2013 -- pushed lower by disappointing earnings in early October and flat sales.
The chance for lower sales of corn seeds because of a bumper crop this year, as well as some weeds and bugs developing resistance to Monsanto's Roundup-Ready products, may have also played a role in Bridgewater's decision to say goodbye to the stock.