Ray Dalio
was the hedge fund world's most successful investor in 2010 and
2011, with his $120 billion Bridgewater Associates LP. His firm
invests based on his understanding of macroeconomic principles.
In
his second-quarter letter
, Dalio said he believed global equity markets were pricing in
"fairly pessimistic" long-term earnings growth rates and the
worst real earnings growth rate in 100 years, while companies
still "retain plenty of ability to protect their operating
margins and profitability by keeping labor costs down," despite
global financial conditions posing a headwind to top-line revenue
growth. He also noted that the dividend yield of U.S.
non-financial corporation is higher than U.S. government note
yields for only the second time in the past 50 years, and
companies had ample liquidity to cover their dividends.
These are Dalio's biggest new stock purchases in the second
quarter: iShares MSCI Brazil Index (
ETF
) (
EWZ
), Cliffs Natural Resources (
CLF
), Honeywell International (
HON
) and Las Vegas Sands (
LVS
).
Dalio's firm bought 2,002,700 shares of the largest new buy,
iShares MSCI Brazil Index (
EWZ
) at an average price of $56 in the second quarter. The holding
now has a 1.5% weighting in Bridgewater's portfolio. The stock
dropped more than $20 from its year-to-date peak in the first
quarter to its year-to-date trough in the second quarter, when
Dalio bought it.
The top stocks within the MSCI Brazil Index Fund are Petrobras (
PBR
), Itau Unibanco (
ITUB
) and Vale (
VALE
). Its last year's return was a loss of 26.85%, and its
three-year return was 3.08%.
Dalio commented in his second quarter letter that the quarter was
negative for most emerging market debt, and that declines in
commodity prices, particularly oil, "contributed to the slight
underperformance in Indonesia, Brazil and Russia." He also said
Japan and emerging markets underperformed the world equity
markets during the period, with returns well below the global
average.
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