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, one of the world's largest hedge fund companies. 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 -- the company's reportable stock portfolio totaled $12.5 billion in value as of the end of 2014.
Although it can be hard to find promising places to park your money when you have so many billions to invest, Bridgewater partly solves that problem with index funds, recently holding about 36% of its reportable stock portfolio value in the Vanguard Emerging Markets Stock ETF, 27% in the S&P 500 SDPR ETF, and 26% in the iShares MSCI Emerging Markets Index ETF.
So, what does Bridgewater Associates' latest quarterly 13F filing tell us? Well, it's been making some interesting sales. Below are three positions it closed out:
1. Boeing Co (NYSE:BA)Boeing has been treating its shareholders very well, with shares up some 22% over the past year, and up an annual average of 22% over the past five years. That's enough to make some worry that it might be due for a breather. After all, its revenue and earnings per share (EPS) have averaged annual growth of 6% and 12%, respectively, over the past decade. That's very solid, and it reflects increasing efficiency, too.
Boeing was plagued by costly delays and problems with its new, fuel-efficient Dreamliner 787, but it's finally putting those behind it and is cranking out 10 per month, aiming to increase that to 12 in the near future. The plane has been selling well, with 800-plus ordered, and Boeing's total commercial order backlog reaching $440 billion, enough to keep the company busy for years. Meanwhile, the company is phasing out its pensions, which have also been costly, and its profit margins and free cash flow are growing. On the other hand, low fuel prices have some expecting a drop in demand for newer, more fuel-efficient aircraft.
Boeing's stock may not be at bargain levels these days, but it holds much long-term promise and offers a dividend that recently yielded 2.4%.
2. The Coca-Cola Co (NYSE:KO)It's easier to imagine why Bridgewater would want to sell its shares of Coca-Cola. I say that because the beverage behemoth has been struggling in recent years, as consumer tastes migrate somewhat from carbonated drinks to "still" ones, such as water, teas, coffees, juices, and energy drinks.
It isn't left out of that picture, though, as Coke owns the major Dasani water brand and has made significant investments in Monster Beverage and Keurig Green Mountain. It can use its powerful distribution network to expand those companies' reach. Another headwind the company is dealing with these days is the strong dollar. Since about 80% of the company's sales volume comes from outside the U.S., it collects a lot of money in foreign currencies, which are converted into fewer dollars when the dollar is strong.
Coca-Cola recently posted its fourth-quarter and full-year results, with global volume growing only 2% in 2014, while net revenue shrank 2% and net income fell by 17%. In recent years, profit margins have been shrinking, too.
A plus for Coke enthusiasts is its dividend, recently yielding 2.9% and hiked by 8% in February. Free cash flow is substantial and growing, topping $8 billion annually. At the very least, Coca-Cola is a long-term income producer, via its dividends, and share-price appreciation is likely over time, too. With its deep pockets, it can boost its fortunes through innovations, partnerships, or acquisitions. For instance, one interesting new offering is milk -- in a new, lactose-free, nutrient-fortified form branded as Fairlife. Don't count Coke out -- its billion-dollar brands recently increased from 17 to 20.
3. eBay Inc (NASDAQ:EBAY)eBay is going through some big changes, spinning off its lucrative PayPal business this year. PayPal's future seems rosy, with e-commerce growing briskly and electronic payments booming. Without PayPal, the remaining online marketplace business is seen by some as a buyout target. The company has been working on building up the marketplace via more fixed-price sales, improved technology and fulfillment, improved mobile operations, and aiming for more big sellers. eBay may also spin off its Enterprise division, reportedly because of limited synergies with the online marketplace.
Bridgewater may have sold its shares because of increased uncertainty about eBay's future. The company's recently reported fourth-quarter results featured anemic top-line growth in its marketplace due in part to lower traffic and the strong dollar, among other factors, but strong performance from PayPal, with revenue popping 18%.