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GME, AMC: Is Bridgewater’s Ray Dalio The New Meme Investor?

Bridgewater Associates initiated a long position on GME and AMC. Is the mega hedge fund betting on either stock heading to the moon?

Are mega hedge funds now buying into “meme mania”? Several financial media outlets have reported lately, with fanfare in some cases, that famed investor Ray Dalio’s Bridgewater Associates has bought GameStop stock GME and AMC Entertainment stock  (AMC) - Get AMC Entertainment Holdings Inc. Class A Report in the first quarter.

These headlines, however, can be a bit misleading. I explain below why Bridgewater’s GME and AMC share purchases are likely not an indication that the Connecticut-based hedge fund has been betting big on these stocks heading to the moon.

Figure 1: GME, AMC: Is Bridgewater’s Ray Dalio The New Meme Investor?

Figure 1: GME, AMC: Is Bridgewater’s Ray Dalio The New Meme Investor?

(Read more from Wall Street Memes: GameStop vs. AMC Stock: Which Meme Stock Should You Invest In?)

Bridgewater buys AMC and GME

Let’s start with the facts. On May 16, Bridgewater filed its 13-F report for the first three months of 2022. This filing is used by certain institutional investors to disclose their long equity positions. Our sister channel Apple Maven, for example, has recently talked about Berkshire Hathaway’s portfolio moves in Q1.

According to the filing, Ray Dalio and his team acquired more than 27,000 shares of AMC. In addition, the fund bought over 4,000 shares of GME in Q1. Bridgewater did not own either stock as of the end of Q4 of last year.

Is there really a story here?

The number of shares listed above may seem like quite a bit to many of us, individual investors. But keep in mind that Bridgewater is the largest hedge fund in the world, at an estimated AUM (asset under management) of $150 billion. It is possible that this amount includes only Bridgewater’s Pure Alpha strategies and excludes the more passive All-Weather portfolios.

The hedge fund’s position in AMC and GME stocks at the end of Q1, valued at a combined $1.4 million, probably represents only 0.001% of Bridgewater’s funds value. The position in AMC and GME would need to be many times larger to even qualify as a rounding error.

Right off the bat, it is clear that Bridgewater’s purchase of AMC and GME in Q1 means virtually nothing for the “meme cause”. In fact, it would make very little sense for a macro fund, one that invests based on its views of the broad markets and global economies, to place a sizable bet on this or that individual stock.

Think about it: the total value of Bridgewater’s entire security ownership disclosed via 13-F amounted to less than $25 billion — much less than the estimated AUM of $150 billion. Many of the top 10 holdings, in fact, were stock ETFs like the Vanguard International Equity  (VWO) - Get Vanguard FTSE Emerging Markets ETF Report and the plain SPDR S&P 500  (SPY) - Get S&P 500 ETF TRUST ETF Report, and not individual stock bets.

Below is a summary of Bridgewater’s Q1 holdings by key categories. Can anyone see the slice of the pie attributable to GME and AMC by any chance?

Figure 2: Bridgewater's estimated holdings in Q1.

Figure 2: Bridgewater's estimated holdings in Q1.

AMC and GME shareholders, therefore, should not read much into Bridgewater’s recent moves into their favorite meme stocks.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)