The star investor is running away from the stock market, but he presented two unexpected moves

Is Ray Dalio “running away” from the market?

The big guns of the investing world, the most closely watched gurus, are publishing their reports on their first-quarter stock market transactions one after the other, so far it can be said that they have significantly reduced their exposure to companies in the sector, including the conglomerate managed by Warren Buffett, Berkshire Hathaway was also an active seller of bank stocks in the first quarter of this year.

Of course, Berkshire was not the only prestigious investment fund that sold large amounts of bank securities in the months between January and March, according to the latest stock market surveillance documents Based on considered the world’s largest hedge fund

BRIDGEWATER ASSOCIATES’ APPROXIMATELY 180 MILLION DOLLARS OF IMPAIRMENT EXPOSURE TO THE SECTOR,

the sales included more than 80 percent of holdings in Bank of New York Mellon and US Bancorp, among others. The Ray Dalio-led hedge fund also zeroed out positions in 15 other US lenders, including Bank of America, Western Alliance, Zions, PacWest and New York Community Bank.

Warren Buffett with his conglomerate and Michael Burry with its base on the other hand, we have become aware of a potentially disturbing circumstance for investors Ray Dalio regarding its attitude towards the stock market: the market value of Bridgewater Associates’ portfolio has decreased significantly in recent quarters, which is not primarily explained by price drops, but by the fact that, according to the

the guru “withdraws” from the market more and more spectacularly.

In the first quarter of last year, the fund had an interest in 968 companies or ETFs in a portfolio worth about 24.8 billion dollars, compared to now the size of the managed fund shrank by 34 percent to $16.4 billion, and the number of companies and ETFs in it dropped to 710.

Dalio’s position suggests that you can expect more serious market turbulence in the future against the guru’s and his previously much-pronounced attitude in the current environment, he does not consider cash to be trash. Also in the media in February he voiced this change of heart, he then put it like that

cash is currently a better investment decision than stocks and bonds.

Watching such a spectacular turnaround, one may wonder if there is a company on the market that despite the increasingly dark macroeconomic outlook (according to Dalio), it may be worth investing now.

Ray Dalio not only sold, but also bought shares

Although Bridgewater Associates reduced its market exposure by around two billion dollars and 110 companies in the first quarter, it also bought shares of the fund’s two technology-focused companies at a particularly high value.

moreover, these companies were added to the portfolio as new elements.

The two tech giants are none other than the Google as its parent company Alphabet, which is listed on the stock exchange, and which operates Facebook Meta Platforms – in the former, Ray Dalio bought 2.3 million shares worth nearly $240 million, and the guru bought one million shares of the latter for $212 million, the two companies make up a total of 2.8 percent of Bridgewater Associates’ portfolio.

Of course, it is not known exactly when the hedge fund closed the transactions in the quarter ending March 31, but there is a good chance thatDalio joined the tech giants in ancient times: Alphabet shares have risen by more than 35 percent so far this year,

while

the price of Meta nearly doubled in 2023.

The following major events took place around the house of the two companies in recent months:

• Alphabet: last year’s fourth quarter was published in February his quick report Google’s parent company, where figures below expectations were announced, revenues and net profit also fell short of the analyst consensus – based on the reasoning, the strengthening of the dollar last year did not favor the company, and the development of YouTube’s advertising revenue also caused disappointment. After that, it was revealed that during the last quarter of last year George Soros his investment fund nearly doubled its stake in Alphabet. Then, in late March, a report came to light addressing claims by a former Google AI researcher that the company used answers from rival ChatGPT to train its own chatbot, Bard – Google, of course, denied the allegations. In mid-April, it was revealed that Samsung is considering that replaces Google as the default search engine on Microsoft-owned Bing, which caused Alphabet’s stock to fall sharply.
• Meta Platforms: Facebook’s parent company in mid-March He laid off 10,000 workers, they also announced that the downsizing is part of a wider restructuring, during which the company has already abandoned its plan to hire 5,000 workers, as well as liquidated several lower-priority projects. A few days after that, Meta Platforms was launched subscription service in the United States, which Facebook and Instagram users they can purchase their authentication. At the end of April, the company’s first quarter came out quick reportbased on which it turned out that more and more people are using Facebook, Instagram and other Meta applications, which is primarily because the company is increasingly actively using recommendations based on artificial intelligencewhich practically binds netizens to its applications.

The May news concerning both companies is Google and Meta you can withdraw access to your news materials in Canada, if they pass a law requiring Internet companies to pay news publishers. Australia was the first to take action against the online tech giants in 2021: Google and Facebook also warned at the time that they would limit their services in Australia, but in the end both companies agreed to a compromise solution with Australian media companies.

In the following, we will see whether the increasingly less optimistic Ray Dalio’s move could be a good idea in the long term, i.e. we will see whether what level they expect the exchange rates to be and what their profit and revenue growth projections are experts at the two technology companies have.

Meta Platforms

What do analysts think? In terms of analyst recommendations, the picture has deteriorated somewhat during the six years behind us, but it can be said that since the end of last year, experts have become more and more optimistic about the Meta Platforms stock. Currently, 48 analysts recommend the paper to buy, 7 experts recommend the stock to hold, and 4 analysts recommend the stock to sell, so the proportion of buy recommendations is relatively high, over 80 percent.

A revenues regarding its expected development, after last year’s sharp jump, analysts expect massive growth in the coming years as well, after the 2022 financial year the profitability is also expected to jump at the social media company. In 2025, experts expect a profit of 41.7 billion dollars, which is 37 percent higher than expected for this year.

The company’s shares pricing compared to the local highs of 2020, it fell significantly in the year and a half behind us, the 12-month forward P/E ratio is currently at the level of 18.8 times, and this a value well below the historical average.

Which is the target prices regarding its evolution, during the past six short years, expectations have been slightly above the current exchange rate, with a smaller or larger lag, except for a short period at the beginning of this year. At the current level, in line with the recently published target price increases

THE SHARE PROMISES 14 PERCENT APPRECIATION POTENTIAL

based on analyst consensus.

Alphabet

What do analysts think? Since the beginning of 2016, we have not seen any major changes in the analyst’s assessment of the share, this rate was relatively balanced above 85-95 percent during the examined period. Currently, 45 analysts recommend buying the paper, 4 recommend holding, no sales offer was received for the share.

Which is the income and profit developments in terms of both metrics, dynamic growth is expected in the coming years, according to analysts, revenue may increase by 31 percent by 2025 compared to the 2022 financial year,

PROFITS CAN JUMP TO ONE AND A HALF TIMES WITHIN THREE YEARS.

Pricing compared to the long-term average, the paper may now seem cheap, the 12-month forward-looking P/E ratio currently stands at 21.4 times – however, the historical average may be distorted by the extremely high values ​​(around 60) of almost 20 years ago. Looking back over a shorter period of time, for example 10 years, a P/E above 21 cannot necessarily be called cheap.

As can be seen in the graph below, until the second half of 2021, according to the analysts target prices and the current share price moved almost hand in hand, however, during the decline following the price peak reached at that time, the scissors opened and the average of the analysts’ target prices was much higher for a long time. However, as a result of the sharp rise in the exchange rate in recent months, the two values ​​are approaching each other again, based on the consensus, the average of the target prices 9.5 percent higher than the current price level.

Cover photo: Jeenah Moon/Bloomberg via Getty Images