Ray Dalio is the founder and manager of the successful Bridgewater Associates, the world’s largest hedge fund. Dalio’s fund is valued at $7.71B and holds a massive stake in S&P 500 companies and exchange-traded funds, with additional holdings focused in basic materials, technology, and services. The fund generated a 7.17% return for investors in the last quarter, helping to counteract a 22.03% loss last year.
The multibillionaire made several notable changes to his portfolio in the fourth quarter of 2015, including a reduction in shares of Facebook Inc (NASDAQ:FB), addition of Skyworks Solutions Inc (NASDAQ:SWKS) investments, and new holdings in Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA). Let’s take a closer look:
In the fourth quarter of 2015, the multi-billionaire decreased his holdings in Facebook by 31.65%. Dalio now owns a stake worth $12.3 million, comprising 0.16% of his portfolio. Zuckerberg’s social media giant recently launched an initiative seeking to compete with Yelp in restaurant reviewing through its local business review site.
The company has had major success in recent monetization efforts, particularly stemming from mobile user ad revenue. Facebook continues to be viewed a leader in its arena and is a top innovator in virtual reality, due to its acquisition of Oculus VR March 2014 and its expected release of the Oculus Rift headset at the end of March.
In contrast to Dalio, analysts are bullish on Facebook with a strong buy rating on TipRanks. Of 33 analysts who have weighed in through the past 3 months. 29 analysts are bullish, 3 are on the sidelines, and only 1 is bearish. The average 12-month price target between these 33 analysts is $134.70, with a 24.27% potential upside from current levels.
Skyworks Solutions Inc
Dalio increased his stake in Skyworks Solutions, a manufacturer of semiconductors and mobile communications systems, in the fourth quarter. Bridgewater Associates increased their stake by 183% for a total investment of $13.62 million in the company. Skyworks makes up 0.18% of Dalio’s portfolio.
The company had a successful 4Q15 and beat analysts revenue estimates despite decreased demand for Apple’s iPhone 6s, as Apple is one of Skyworks’ main customers. The company was also negatively influenced by a failed attempt to acquire software company PMC-Sierra in the fourth quarter.
Skyworks Solutions entered an agreement acquire PMC-Sierra, a software and semiconductor solutions provider, for $2 billion in early October. However, the company was later outbid by Microsemi and walked away from the deal. Skyworks stock showed a small spike directly following the agreement, in addition to a drop in mid-November when the deal formally ended. Skyworks has been criticized for its overreliance on business from Apple and was negatively impacted by the lowered demand for the newest model of the iPhone.
Analysts’ views are in line with Dalio’s move, as demonstrated by a bullish consensus of all 12 analysts who have weighed in on Skyworks in the last three months. The average 12-month price target between these 12 analysts is $93.20 with a 27.65% potential upside.
Teva Pharmaceutical Industries Ltd (ADR)
Dalio introduced Teva Pharmaceuticals into his portfolio in the fourth quarter through obtaining a stake of $1.58 million in the company. This holding makes up 0.02% of Dalio’s massive portfolio.
In November, the pharma giant announced a joint venture with Takeda Pharmaceutical Co. Ltd. to increase focus on generic drug sales in Japan. The companies hope to start operations in 2Q:16, given standard regulatory approvals. Teva’s strengths in supply chain management, R&D and global operations pair well with the consumer relationship and brand recognition of Takeda, as a Japan-based corporation.
Teva also announced in November its plan to sell $6.75 billion in stock in order to fund its acquisition of Actavis Generics, the generic business of Allergan. This deal was announced in July and the expected acquisition gives analysts an optimistic outlook on Teva’s future performance due to its quality pipeline inheritance.
Analyst’s recent stances support the sentiment of Dalio’s Teva addition. In the last 3 months, 9 analysts have weighed in on Teva Pharma with 6 analysts feeling bullish and 3 neutral. Teva has a $72.44 average 12-month price target and a 30.24% upside from where markets last closed.