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Bridgewater Reduces Emerging Markets Exposure And Backs More US Large Caps

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Discusses the funds largest trades during the quarter

Bridgewater is a North American hedge fund based in Westport, Connecticut and was founded by investor Ray Dalio. The fund is currently run by Co-CEO Nir Bar Dea and Mark Bertolini and Co-CIOs Bob Prince and Greg Jensen.`

The fund currently has 985 positions according to SEC filings.

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The largest 10 positions by currently held in the fund by size are:

  1. (NYSE:PG) Procter & Gamble Co
  2. (NYSE:JNJ) Johnson & Johnson
  3. (NYSEARCA:IEMG) Ishares Emerging Markets ETF
  5. (NYSE:KO) Coca-Cola Co
  6. (NYSEARCA:IVV) Ishares Core S&P 500 ETF
  7. (NYSEARCA:VWO) Vanguard Emerging Markets ETF
  8. (NASDAQ:PEP) PepsiCo
  9. (NASDAQ:COST) Costco
  10. (NYSE:WMT) Wallmart

The fund's assets are heavily weighted towards US large camp conglomerates that are producing fast moving consumer goods (FMCG) with sticky revenue generation. These businesses are profitable and will tend to perform better in a market downturn when compared to higher growth businesses with lower cash flow generation.

Two of the ETF’s in the top 10 holdings are invested in emerging market equities that typically produce higher return opportunities in bullish growth markets but suffer more in times of global economic stress as inventors rotate to developed markets in a flight to safety.

A heat map has been included below which illustrates the hedge funds' top 100 positions by size:


Bridgewater's Top Increases During The Quarter

CVS Health (NYSE:CVS) saw the largest flow of accumulation during the quarter with the fund growing its position weight by 0.75% to 1.24% with a $290 million total investment.

The second largest position increase was in iShares Core S&P500 ETF (NYSEARCA:IVV) with a position increase of 0.67% to a 2.73% weight. The IVV ETF is tracking -18% lower over 2022 as the index has rallied 8% over October.

Chinese based agricultural tech firm Pinduoduo’s US ADR listing (NASDAQ:PDD) was on the top 10 list with a 0.46% growth in portfolio allocation to 1.26%. The stock has experienced very strong institutional accumulation over the last few years explained by a Fintel ownership accumulation score of 88.54. The stock is trading above pre-pandemic levels but well below intra-pandemic highs.

The fund increased its energy exposure with an 0.31% portfolio allocation growth in Exxon Mobil (NYSE:XOM) to an 0.69% weight. The stock is trading at all-time highs but is also making record earnings as oil and gas prices have spiked substantially over 2022. Despite the strength in the share price, XOM continues to trade on a PE ratio below 10x.

Other newer tech and fintech large-caps positions in the portfolio included included payments company Mastercard (NYSE:MA) to a 0.64% weight, Alphabet (NASDAQ:GOOGL) with an 0.45% weight, Meta Platforms (NASDAQ:META) with a 0.40% weight and Booking holdings (NASDAQ:BKNG)

Top Fund Decreases During The Quarter

During the quarter, the fund reduced its exposure to emerging markets by exiting 3.32% of its weight in iShares MSCI Emerging Markets ETF (NYSEARCA:EEM) to 0.24%, the position in the Vanguard World Emerging Markets ETF(NYSEARCA:VWO)  by a 1.5% allocation down to 0.24% and reduced the allocation in the iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG) by 0.39% to 3.18%

Chinese e-commerce firms Alibaba (NYSE:BABA) and JD.com (LON:JD) were also on the list with both position weights of 3.28% and 0.5% were sold completely.

The fund reduced its Gold position in ETF SPDR Gold Trust (NYSEARCA:GLD) by 0.6% to an 0.93% weight. The ETF performed well during the pandemic as investors bought into the commodity as a ‘safe haven’ investment. During 2022 the ETF’s price began to unwind with the price declining 9% so far.

Other sales included retailer Costco (NASDAQ:COST) to a 2.45% weight and global chemical company Linde PLC (NYSE:LIN) to a mere 0.06% weight.

Article by Fintel