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.

The fund added 480,000 shares of the industrial conglomerate General Electric ( GE) in the quarter, bringing the market value of its holdings in the company to $43 million.

Applied Materials ( AMAT), the world's No. 1 supplier of semiconductor-manufacturing equipment, is the fourth-largest stock holding, at $42 million. The fund added 1 million shares in the quarter. Its shares are down 15% this year.

The fund bought $740,000 shares of NetApp ( NTAP), which sells hardware, software and services that enable customers to store and manage data, bringing its stake to $39 million. NetApp's shares have tumbled 22% this year.

Computer Sciences Corp. ( CSC), one of the oldest and biggest information-technology-service providers in the world, remains another top holding. The fund added 462,000 shares, worth $1 million in the period, to bring its stake to $38 million. The company's shares have plunged 40% this year.

The fund initiated stakes in Tesoro ( TSO), which owns oil refineries and 850 gas stations in the Southwest, buying a $16 million stake, and the drugmaker Pfizer ( PFE), with a $14 million investment.

The fund got out of positions in biopharmaceuticals maker Cephalon ( CEPH), selling out a $19 million stake, and Anixter International ( AXE), a seller of communications products and electrical wire and cable components, dumping its $11 million holding.

Hedge funds that manage more than $100 million are required to disclose their equity holdings, options and convertible debt on a Form 13F filed to the SEC within 45 days of the end of a quarter. Funds aren't required to report short positions betting on declines.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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