In the case of the third quarter of 2023, the common denominator of all three fund managers can be considered a reduction in the number of positions and a decrease in the value of the volume of assets under management. Two of them also found new companies to reinvest the free money, including chipmakers, companies developing artificial intelligence and more defensive stocks from the utilities sector, which was one of the worst performers in 2023.
Bridgewater Associates is the largest hedge fund firm in the world, with total assets under management of $124 billion. Its founder Ray Dalio Like Buffett, he began investing as a boy and founded Bridgewater in 1975, which he has since retired from active management. In 2017 Dalio published a book summarizing his life’s work, “Põhimõtted”, also available in Estonian. According to the latest data, Dalio’s personal wealth is estimated at 15.4 billion dollars.
The number of positions at Bridgewater remained high in the third quarter, although down to 740 from 806 a quarter ago. At the same time, the portfolio’s market value fell 1% to $16.5 billion, largely due to a 5% decline in Dalio’s key position, IEMG, an index fund that aggregates companies across markets emerging markets, in the third quarter, which was not compensated by a certain appreciation of other securities in the portfolio. Its other largest holdings, an ETF aggregating the 500 largest U.S. companies and consumer goods maker Procter & Gamble, also reduced the portfolio’s total value in the third quarter. For each of the three largest positions, Dalio increased bets slightly, and overall, the investor was on the buying side with $1 billion in net investments in the third quarter.
Dalio’s portfolio also includes a number of individual Chinese stocks that lost market value in the third quarter, although he sold them more. In terms of more significant investments, Dalio exited agricultural chemicals and seed company Corteva, natural gas distribution and related services provider Oneok, and chipmaker Micron Technology.
Among the new positions are numerous investments in US technology giants, including the semiconductor company Broadcom, but also Netflix and Nvidia. As game maker Activision Blizzard’s position disappeared in the third quarter due to its merger with Microsoft, a new concurrent investment in its rival, Electronic Arts, shows that Dalio still wants to keep video games in his portfolio.
In Bridgewater, 388 positions were increased in the third quarter, while only 215 were sold. Boyd Gaming, a gaming and guest solutions company, was the most bought, increasing the position to 94,000 shares. Holdings were also increased in other consumer-oriented companies, such as homebuilder KB Home and flooring maker Mohawk Industries. In the last two investments we can read that Dalio is more optimistic than before about the prospects of the US construction market.
Partial sell-offs were instead dominated by the energy sector, including oil companies ConocoPhillips, ExxonMobil, Cevovus Energy and Chevron. In all of these cases, the majority of the position was sold, leaving only a marginal amount of shares in the portfolio.
Holding company Icahn Enterprises to possess Carl Icahn, considered one of the most successful investors of all time, has earned a reputation as an activist investor and tamer of large companies. His work focused on acquiring several large companies and forcing corporate managements to operate more profitably, but he also fought for shareholder rights. Icahn’s personal wealth reaches $5.6 billion.
In the third quarter, the market value of Carl Icahn’s portfolio decreased by 22% and reached $12 billion, due to the more prominent position of the investor Icahn Enterprises, which operates in different fields of business through several subsidiaries. The stock price continued to decline in the third quarter and doubled by 32% (Q2 2023: -44%) after the company announced an unexpected dividend cut in the second quarter from $2 to $1. The stock price has also been negatively impacted by Hindenburg Research’s short position, which believes the stock is trading at an excessive premium to its net worth.
In recent months, Icahn has reduced some of his most important positions. He closed a years-long Xerox Holdings Corp. investment in the company in September, selling his remaining stake back to the company for $542 million — a sale that ended Icahn’s closings in the third quarter. In part, Icahn reduced the total volume of investments in two positions: Newell Brands, which sells various consumer goods, and CVR Energy, which produces renewable fuels and refines oil. Icahn’s transactions show that in the fourth quarter, November 16 to be precise, the investor also reduced the number of shares of Crown Holdings, a company that produces metal packaging for drinks and food, by 26%, with a share now equal to 5%.
Overall, Icahn sold in the third quarter: his net purchases totaled -$547 million.
Much less known than the others, but still very followed, is the hedge fund that manages 15.9 billion dollars Third point the founder Daniele Loeb. Like Icahn, Loeb is also known as an activist investor who sometimes harshly criticizes corporate management and tries to effect change in its management. Loebi was often successful in this endeavor. According to the latest data, his personal wealth is estimated at 3.3 billion dollars.
In the 3rd quarter the market value of Daniel Loeb’s portfolio decreased by 3% to $6.6 billion, the total number of positions also decreased, which went from 45 to 41. The investor’s top three positions saw some changes during the quarter: the largest investment is still in electric and gas company PG&E, but a large investment in Microsoft moved it to the second largest position. In third place is the industrial conglomerate Danaher Corporation, whose share count was reduced by 5%. Loeb’s portfolio is quite concentrated, as the 5 largest positions make up half of the total portfolio, leaving the other half at 36 investments.
The new positions include a $330 million investment in Meta Platforms, a $154 million investment in United Steel Corporation, and a $140 million investment in T-Mobile, which owns and operates wireless cellular networks in the United States and offers smartphones and various related services. In terms of numbers, Loeb has opened the largest number of positions in companies in the utilities and communications sector, namely in addition to the latter, Telephone and Data Systems and United States Cellular.
On the sales front, however, Loeb exited 13 positions and reduced the volume of investments in 6, including Alphabet (change in the number of shares: -36%), Taiwan Semiconductor Manufacturing Co (-27%) and DuPont De Nemours (-9%). Among the closed positions were the most technological ones, especially in the semiconductor field, but the sale of Alibaba together with the closure of Nvidia and HCA Healthcare proved to be the most important in terms of investment value. Loeb therefore also reduced the number of shares in technology companies more, but increased bets on companies in the consumer goods sector.
In total, the sum of all trades made by Loeb in the third quarter amounted to -52 million euros, which means that in his case too the optimism towards the stock markets has weakened a bit.
Larger positions are taken based on the market value of the stocks, the numbers in parentheses represent the change in the number of shares in the position. The new TOP3 are classified based on the quantity purchased. The TOP3 sold are classified according to the quantity sold. Added TOP3s and reduced TOP3s are ranked based on the change in the number of shares. All lines in brackets report the change in the number of shares of the position in parentheses. Sources: nasdaq.com
How do we know this? In the United States, investment funds (or institutional investors) are required to file a 13F report with the Securities and Exchange Commission (SEC) every quarter, which lists all of the investor’s positions and related transactions. Only US stocks and long positions need to be reported, so shorted stocks are not included in these reports.
It should also be noted that since investors are obliged to publish their reports within 45 days of the end of the quarter (and generally do not even do so before), the information recorded at the end of the quarter no longer reflects the most recent status of the investment fund or the company. However, 13F reports provide a great opportunity to get a glimpse into the minds of funds (and their world-class managers). By analyzing these ratios, you can get an idea of where well-known investment gurus see growth potential and where they don’t.
2023-12-04 09:49:16
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