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Bridgewater Associates buys HPQ, RL, and GE and sells TSO, BEN, and CTSH—13F Flash F

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Nov. 20 2020, Updated 1:13 p.m. ET

Bridgewater Associates is an investment management firm founded by Ray Dalio in 1975 and based in Westport, Connecticut. It manages approximately $150 billion in global investments for a wide array of institutional clients, including foreign governments and central banks, corporate and public pension funds, university endowments, and charitable foundations. It’s a pioneer in risk budgeting and the separation of alpha and beta, managing portable alpha/global tactical asset allocation (GTAA), hedge fund, optimal beta/risk parity, currency overlay, global fixed income, and inflation-indexed bond mandates.

Abbreviated financial summaries and metrics for these securities are included below. Detailed analysis and recommendations require a subscription (more information at the bottom of the article).

Bridgewater Associates started new positions in Hewlett-Packard Co. (HPQ), Ralph Lauren Corp. (RL), and General Electric Co. (GE) and sold Tesoro Corp. (TSO), Franklin Resources Inc. (BEN), and Cognizant Tech Solutions (CTSH).

Why sell Cognizant Tech Solutions (CTSH)?

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Cognizant Technology Solutions reported solid 3Q earnings, beating analyst estimates due to a faster ramp-up in demand for outsourcing services and strong discretionary spending on consulting and technology services. Revenue for 3Q 2013 rose to $2.31 billion, up 21.9% from $1.89 billion in 3Q 2012. Consulting and technology services, formerly known as “application development,” represented 50.8% of the revenue. Outsourcing services, formerly known as “application management,” were 49.2% for the quarter. CTSH closed the quarter with 1,133 active customers, and the number of accounts considered strategic increased by seven, bringing its total strategic clients to 236.

For full-year 2013, CTSH expects to continue delivering industry-leading revenue growth. Based on current conditions and client indications, it revised its revenue guidance upwards to at least $8.84 billion, representing full-year growth of at least 20.3%. The stock is up 23% year-to-date as of the close of trading on November 29.

Bridgewater Associates founder Ray Dalio received a BA from Long Island University and an MBA from Harvard Business School. He founded Bridgewater in 1975 in his New York City brownstone apartment. At the time, he actively traded commodities, currencies, and credit markets. His initial business was providing risk consulting to corporate clients as well as offering a daily written market commentary titled “Bridgewater Daily Observations” that’s still produced. Bridgewater’s competitive edge was creative and quality analysis. According to Dalio, Bridgewater Associates is a “global macro firm.” It uses “quantitative” investment methods to identify new investments while avoiding unrealistic historical models. Its goal is to structure portfolios with uncorrelated investment returns based on risk allocations rather than asset allocations. In 1989, it launched its flagship fund, Pure Alpha, a hedge fund/GTAA/portable alpha strategy. In 1996, it launched a second fund, All Weather, a diversified beta strategy/risk parity portfolio.

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