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TheStreet Open House

Bridgewater, Alas, Also Lost Money on Stocks

BOSTON ( TheStreet) -- Even though Bridgewater Associates is the biggest hedge-fund firm, it isn't as widely known as Paulson & Co. or Soros Fund Management. But in the past week, Ray Dalio's Westport, Conn.-based investment company made news by eclipsing rivals as it posted gains of 5%, or $3.5 billion, while the S&P 500 Index dropped 8%.

Bridgewater's flagship $71 billion hedge fund made money by investing in so-called safe-haven investments, such as gold and the Swiss franc, which rose to records, and Treasury bonds, whose yields sank close to all-time lows.

Bridgewater oversees a total of about $100 billion but must report holdings amounting to only about 7% of that to the Securities and Exchange Commission. In its recently released second-quarter report, the firm showed it turned, in part, to index-tracking exchange traded funds to capture broad trends in investing. Those ETFs and other top equity holdings lost money -- as most investors did -- in contrast to Bridgewater's flagship fund.

Three ETFs comprising 60% of $7.1 billion in assets reported to the SEC were the SPDR S&P 500 ETF (SPY), the Vanguard MSCI Emerging Markets ETF (VWO) and the iShares MSCI-Emerging Markets ETF (EEM). All have been losing bets since Standard & Poor's downgraded U.S. debt for the first time in history Aug. 5, sparking a stock-market sell-off.

Besides the ETFs, the Bridgewater fund reported to the SEC held 358 stocks on June 30. It increased its industrial-sector holdings by 3.1% in the second quarter and decreased its financials weighting by 3.6%. Fund manager Dalio also favored information-technology stocks, lifting its sector weighting by 1.1%.

Among the fund's big stock buys was Novellus Systems (NVLS), which makes chemical and physical vapor deposition systems used in the production of semiconductors. The fund bought 715 million shares worth $1.4 million, which brings its holdings in the company to $50 million, making it the fourth-largest holding and the biggest stock position. Novellus' shares are down 8.7% this year.

Although it whittled down its stake in software giant Microsoft (MSFT) by 255,000 shares to 1.7 million in the quarter, Bridgewater's stake of $44 million helped it maintain its position as the second-largest stock holding. The company's shares are down 8.6% this year.

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