Is Bridgewater Prepping for Volatility?

Introduction

Bridgewater Associates, one of the largest hedge funds in the world, may be preparing for a storm. 

The fund has navigated the first few months of the year relatively unscathed. However, recent warnings suggest it could be making moves to improve resilience.

In this article, OPTO takes a closer look at Bridgewater’s Associate’s recent Q4 2024 13F filing. We examine the fund’s major buys and sells, and what these could mean for its 2025 outlook.

Warning Signs

Resilience is the name of the game for Bridgewater, thanks in part to its founder’s focus on economic trends and investment diversification. 

However, Dalio has seemed rather bearish in recent weeks. Speaking at the World Governments Summit in Dubai on February 13, he warned the US government to cut the country’s ballooning debt or face the risk of an “economic heart attack”.

In another risk-adverse development, on March 6, State Street Global Advisors and Bridgewater Associates launched the SPDR Bridgewater All Weather ETF [ALLW]. The ETF is based on Dalio’s signature “all weather” risk parity approach, with a diversified set of asset classes to provide resilience in the face of market turmoil. 

The Big Picture for Q4 2024

Bridgewater’s flagship fund Pure Alpha, which focuses on macro trends such as inflation and interest rates, posted gains of 9.25% in the year to March 6, following gains of 11.3% in 2024, even as fellow hedge funds Millennium Management and Citadel posted losses. In comparison, the S&P 500 was down 2.43% in the year to March 6, following a 23.31% increase in 2024. 

According to Bridgewater’s most recent 13F filing, the fund was worth $21.81bn in Q4 2024, up 23.51% from $17.66bn in Q3. This is close to the highs the fund saw in the first half of 2022, with $25bn and $24bn held in Q1 and Q2, respectively. However, notable shifts in the fund’s holdings could suggest it is repositioning to deal with a new, more volatile, economic reality.

A Focus on ETFs

The most notable change in Bridgewater’s holdings is an 884% increase in its shares of the SPDR S&P 500 ETF Trust [SPY], which tracks the S&P 500. The ETF now makes up some 22% of Bridgewater’s total holdings, at 8,232,049 shares, up from just 836,965 shares in the previous quarter. This purchase saw SPY jump four spots to become the fund’s single largest holding. 

The second-largest holding, iShares Core S&P 500 ETF [IVV], also tracks the S&P 500 and represented 5.5% of the fund’s value in Q4. The third-largest holding, the iShares Core MSCI Emerging Markets ETF [IEMG], tracks a diversified portfolio of companies in emerging markets, and represents 4.2% of the fund’s value. 

This focus on ETFs is in line with the diversification strategies to boost portfolio resilience, as it helps to reduce exposure to the ups and downs of a single company’s share price. That said, Bridgewater also made purchases of shares of several prominent companies in Q4, marking where it could see room for growth. 

Big Buys

Beyond ETFs, the largest gain in position in Q4 was the purchase of 5,188,460 shares of AT&T [T], an increase of 402%. The once-struggling telecoms company seems to have been revitalized under the leadership of CEO John Stankey. Its share price is up 67.88% in the 12 months to March 10, buoyed by strong Q4 earnings and encouraging medium-term growth projections.

Bridgewater also bought 2,533,399 shares of Lam Research [LRCX] after selling the entirety of their holdings. Analysts remain moderately optimistic about this semiconductor stock. It started the year down 36.09% on its 25-week high recorded on July 11, 2024, suggesting Bridgewater bought the stock in a dip in anticipation of future gains. 

The most notable newcomer to Bridgewater, however, is Singapore-headquartered super-app provider Grab Holdings [GRAB]. The fund bought 1,545,359 shares in Q4 as positive analyst sentiment crystalized around the stock. GRAB is up 37.79% in the past year but has had a notably rockier 2025, dropping 12.71% in the year to date. 

Other big purchases include a 940% increase in holdings of Lyft [LYFT], a 646% increase in holdings of Robinhood [HOOD] and a 531% increase in holdings of eBay [EBAY].

The Sells

While Bridgewater sold off a number of smaller holdings in Q4 2024, it also pared key holdings considerably. 

A sale of 1,154,328 shares of Ford Motor [F] reduced the stake in the company by 96%, potentially in light of its poor stock performance over the past 12 months. 

The fund also sold over 2 million shares of Walmart [WMT], Uranium Energy Corp [UEC] and Denison Mines Corp [DNN], reducing holdings of each stock by 73%, 62%, and 35%, respectively. It was potentially cutting losses on the last two stocks while collecting earnings on WMT stock, which rose 73.98% over the course of 2024 but has since turned back from its rally.

Bridgewater axed 100% of its holdings of Kosmos Energy [KOS], the equivalent of 3,280,302 shares. KOS stock was down 61.59% in the 12 months to March 10 following several analyst downgrades and a disappointing Q4 earnings report in February. It also sold the entirety of its holdings of Micron [MU], a total of 983,685 shares, potentially in reaction to muted guidance for Q2 sales announced on December 18. 

Conclusion

In preparation for 2025, Bridgewater Associates seems to be sticking to Dalio’s principles for a diversified, risk-adjusted portfolio. In addition to significant ETF acquisitions, key increases and sales highlight where the famous hedge fund manager may see winners and losers in the year to come.