Bridgewater Associates, founded by billionaire investor Ray Dalio, went heavy on most of the "magnificent seven" stocks while offloading giants like Cisco Systems and Qualcomm despite posting solid Q1 results, according to the latest company 13F filing.
Dalio's strategies around risk parity to balance risks across asset classes, "Pure Alpha" to attain maximum return-to-risk ratios via active management, and the "All Weather" investments for consistent returns regardless of the economic landscape have helped Bridgewater Associates become the largest hedge fund in the world. The fund manages $124 billion of assets under management (AUM).
Meanwhile, Dalio is worth $15.4 billion and retired as co-CIO in 2022 to give the fund's reins to younger management. He stepped down as CEO in 2017 but remains a board member and a mentor. The market upheaval of 2022 weighed heavy on the fund, but the new leadership's cost-cutting measures and organizational restructuring helped them boost profits to double-digits this year.
In Q1 2024, Bridgewater Associates completely offloaded software firm BILL Holdings (NYSE: BILL) despite beating revenue and profit estimates in the latest quarterly results. The fund also trimmed a 94% stake in Cisco Systems (NASDAQ: CSCO) and 77% of Hewlett Packard (NYSE: HPQ), which climbed 12.78% in the last three months. The HP move might have taken aback investors despite upbeat forecasts for a sustained rise in demand and sales of AI-powered PCs.
Further selldowns include a 90% drop in stake of QUALCOMM Incorporated (NASDAQ: QCOM), almost 1.7 million shares of Coca-Cola (NYSE: KO), and 892,158 shares of PDD Holdings (NASDAQ: PDD), where all posted significant gains in the last six months.
However, the hedge fund's holdings in tech stocks in Q1 increased quarter-over-quarter to 17% from 7%. It appears the hedge fund used the proceeds from the stock sale to boost existing stakes in several of the "magnificent seven" stocks with a focus on AI hardware makers and those who are to benefit from AI integration.
Bridgewater Associates more than doubled its stake in Nvidia to end Q1 with 704,599 shares of the multi-trillion firm, worth over $600 million. This trade alone might have been the firm's best bet last quarter as Nvidia (NASDAQ: NVDA) shares reached record-high prices to above $1,000 a piece this week after posting record quarterly revenues.
Nvidia's Q1 revenue jumped 262% year-over-year (YoY) to $26 billion. More importantly, its quarterly data centre revenue increased by 427% YoY to reach $22.6 billion due to its generative AI computing efforts complemented by the NVIDIA Blackwell platform. The company also announced a ten-for-one forward stock split on June 7 and raised the quarterly cash dividend by 150% to $0.01 per share on a post-split basis.
In the same quarter, Dalio's fund entered a new position to add Nvidia-rival and a leading chipmaker, Advanced Micro Devices (NASDAQ: AMD), to its portfolio, scooping up 679,454 shares worth $122.63 million. Moreover, Amazon (NASDAQ: AMZN) ramping up AI efforts in its operations and products via Amazon Web Services likely caught Bridgewater Associates' attention. The fund opened a fresh trade to buy 1.04 million shares of Amazon worth $189 million during the quarter.
Other big trades were also in the tech space, prioritizing AI adoption and integration. The fund added around 3.3 million Class A shares of Alphabet (NASDAQ: GOOGL), 1.84 million shares of Apple (NASDAQ: AAPL), 328,000 shares of Meta Platforms (NASDAQ: META), and 381,000 shares of Microsoft (NASDAQ: MSFT) in Q1.
Several billionaire investors, including David Tepper, are diversifying their tech holdings to buy cheap AI tech stocks in China and capitalize on the record valuation gap between China and the US markets. Dalio has also been a long-time investor in China's stock markets, which, according to him in a LinkedIn post last month, has been a success in all the ways he had hoped.
Despite the financial concerns in China stemming from a sluggish post-pandemic economic rebound, a battered real-estate sector, and geopolitical tensions, Dalio said the "markets in China good for my type of decision making."
However, the move to bolster US tech stakes last quarter has already started paying off for Bridgewater Associates, shaped by Dalio's investing approaches over several decades.
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