In this article, we discuss billionaire Ray Dalio's 15 best stock picks. If you want to see more stocks in this selection, check out Billionaire Ray Dalio's 5 Best Stock Picks.
While Ray Dalio gave up active leadership position of his hedge fund Bridgewater Associates to a new generation of fund managers, he still has a significant say on investment ideas owing to his position on the board. After retiring last year, he serves as the official mentor of three co-chief investors. He has denied claims that he plans to return to the hedge fund, insisting his focus on running a family office and mentoring the new Bridgewater leadership team.
Dalio recently warned that US stocks look increasingly expensive after an explosive start and run in 2023. According to Dalio, America faces severe political and economic risks, compounded by rising interest rates. Internal tensions and external threats are also creating a risky situation, according to the legendary investor. Despite the pessimism about the US market outlook, Dalio remains heavily invested with big bets on services companies, with consumer goods companies and healthcare stocks also accounting for a significant portion of Bridgewater's portfolio.
Additionally, Dalio has made a name for himself by picking some of the best small-cap stocks that have outperformed the overall market. His bet on Merit Medical Systems, Inc. (NASDAQ:MMSI), Hostess Brands, Inc. (NASDAQ:TWNK), Evolent Health, Inc. (NYSE:EVH), and Lancaster Colony Corporation (NASDAQ:LANC) have turned out to be a great success going by the solid returns over the past three years.
Dalio investment firm Bridgewater Associates is best known for its investment strategy that diversifies stakes in various sectors. While the focus of the fund is always on the big tech companies, Dalio's performance on small-cap stocks speaks for itself. Between 2006 and 2018, Dalio's small-cap stock picks outperformed the S&P 500 index by 2.5% per year. We have gathered some of the best small-cap stocks that the legendary investor's hedge fund owns. These are the top 15 small-cap stocks from Bridgewater's portfolio at the end of Q2 2023.
Merit Medical Systems, Inc. (NASDAQ:MMSI) makes single-use medical products for various procedures. The company provides intervention products for diagnosing and treating diseases in peripheral vessels and organs. It also offers custom procedural solutions, including critical care products and disinfection protection systems.
Over the past three years, Merit Medical Systems, Inc. (NASDAQ:MMSI)’s value has more than doubled, a period in which Bridgewater Associates has generated significant returns through its stakes in the company.
Bridgewater Associates Q2 2023 Investment: $5.98 Million
Percentage of Bridgewater Associates portfolio as of Q2 2023: 0.03%
Number of Hedge Fund Holders: 22
Market Capitalization as of October 12: $2.13 Billion
Daqo New Energy Corp. (NYSE:DQ) is a technology company that manufactures and sells polysilicon to photovoltaic manufacturers in the People's Republic of China. Its product line includes ingots, wafers, cells, and modules for solar power solutions.
Daqo New Energy Corp. (NYSE:DQ) has emerged as one of the best players to gain exposure amid the growing push for green energy, focusing on solar energy. The company has also proved reliable in returning value to shareholders, announcing a $700 million stock repurchase last year.
Bridgewater Associates Q2 2023 Investment: $6.13 Million
Percentage of Bridgewater Associates portfolio as of Q2 2023: 0.03%
Number of Hedge Fund Holders: 18
Market Capitalization as of October 12: $4.42 Billion
Hostess Brands, Inc. (NASDAQ:TWNK) develops, manufactures, and sells snack products, including sweet rolls, snack cakes, breakfast pastries, cookies, and sweet baked goods.
Bridgewater Associates Q2 2023 Investment: $6.14 Million
Percentage of Bridgewater Associates portfolio as of Q2 2023: 0.03%
Number of Hedge Fund Holders: 18
Market Capitalization as of October 12: $3.37 Billion
The Simply Good Foods Company (NASDAQ:SMPL) is a consumer food and beverage company that develops markets and sells snacks and meal replacements. The company offers protein bars, ready-to-drink shakes, and sweet and salty snacks. It distributes its products through various retail channels and other channels.
Bridgewater Associates first bought stakes in the company in early 2021 as The Simply Good Foods Company (NASDAQ:SMPL) bottomed out after a COVID-19-triggered slowdown. The stock has since gained 65% despite pulling back from its 52-week highs.
Bridgewater Associates Q2 2023 Investment: $6.15 Million
Percentage of Bridgewater Associates portfolio as of Q2 2023: 0.03%
Number of Hedge Fund Holders: 49
Market Capitalization as of October 12: $4.66 Billion
Lantheus Holdings, Inc. (NASDAQ:LNTH) is a healthcare company that manufactures and commercializes diagnostic and therapeutic products that assist clinicians in diagnosing and treating heart, cancer, and other diseases worldwide. The company offers DEFINITY, an ultrasound-enhancing agent used in echocardiography exams.
Bridgewater Associates Q2 2023 Investment: $6.17 Million
Percentage of Bridgewater Associates portfolio as of Q2 2023: 0.03%
Number of Hedge Fund Holders: 20
Market Capitalization as of October 12: $2.70 Billion
While CNO Financial Group, Inc. (NYSE:CNO) appears to have stagnated in 2023, it is up by over 29% over the past three years, beating the market return of 15%. Bridgewater Associates has benefited from the rally on the buying and selling spree over the past two years. The hedge fund held 260,610 shares in the company in the second quarter.
Bridgewater Associates Q2 2023 Investment: $6.26 Million
Percentage of Bridgewater Associates portfolio as of Q2 2023: 0.03%
Number of Hedge Fund Holders: 26
Market Capitalization as of October 12: $3.19 Billion
Evolent Health, Inc. (NYSE:EVH) offers clinical and administrative solutions to payers and providers in the US. The Evolent Health Services segment offers financial and administrative management services such as health plan services, risk management analytics, and reporting.
Bridgewater Associates owns about 206,514 shares of the company as of the end of the second quarter, accounting for 0.03% of the portfolio.
Bridgewater Associates Q2 2023 Investment: $6.57 Million
Percentage of Bridgewater Associates portfolio as of Q2 2023: 0.04%
Number of Hedge Fund Holders: 15
Market Capitalization as of October 12: $2.85 Billion
Cohen & Steers, Inc. (NYSE:CNS) is a financial services company that provides asset management services to institutional investors, including endowments, pension funds, and foundations. It also launches and manages equity fixed-income, balanced, and multi-asset mutual funds.
Bridgewater Associates Q2 2023 Investment: $6.99 Million
Percentage of Bridgewater Associates portfolio as of Q2 2023: 0.04%
Number of Hedge Fund Holders: 19
Market Capitalization as of October 12: $1.88 Billion
Headquartered in Illinois Chicago, Adtalem Global Education Inc. (NYSE:ATGE) provides workforce solutions through three segments: Walden, Chamberlain, and Medical and Veterinary. The Chamberlain segment offers programs for nurses and health workers. The Walden segment offers online degrees and certificates.
Adtalem Global Education Inc. (NYSE:ATGE) is up by 21% year to date. Bridgewater Associates first invested in Adtalem Global Education Inc. (NYSE:ATGE) in 2018, and as of the second quarter, it held stakes worth $6.9 million in the company, accounting for 0.04% of the portfolio.
Bridgewater Associates Q2 2023 Investment: $7.17 Million
Percentage of Bridgewater Associates portfolio as of Q2 2023: 0.04%
Number of Hedge Fund Holders: 20
Market Capitalization as of October 12: $4,78 Billion
Lancaster Colony Corporation (NASDAQ:LANC) is a consumer defensive company that manufactures and markets specialty food products for the retail and food service channels in the US. The company's lead products include frozen garlic bread under the BRAND bakery brand.
Bridgewater Associates first took interest in Lancaster Colony Corporation (NASDAQ:LANC) at the height of the pandemic in 2020 and has since been buying and selling stakes with each significant rally. As of the end of the second quarter, the stock accounted for 0.04% of the hedge fund portfolio.
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