Dalio's Bridgewater Doubles Brazil ETF Stake

By Benzinga.com  FEB 14, 2013 3:00 PM

Last year, EWZ was by far the worst performer in the four major ETFs tracking the BRIC nations.

 


Editor's Note: This content was originally published on Benzinga.com by The ETF Professor, Benzinga Staff Writer.

After reducing its stake in the ETF during the third quarter, Ray Dalio's Bridgewater Associates more than doubled its interest in the iShares MSCI Brazil Index Fund (NYSEARCA:EWZ) in the fourth quarter, according to a 13F filing with the Securities and Exchange Commission.

The filing, released Wednesday after the close of US markets, indicates Bridgewater now holds more than 2.85 million shares of EWZ, the largest ETF tracking Latin America's largest economy. Bridgewater's 13F for the third quarter of 2012 showed the world's largest hedge fund owned 1.15 million shares of EWZ at the time.

Bridgewater snatching up more EWZ in the fourth quarter is obviously a departure from what was seen in the third quarter, when the hedge fund pared its stake in the ETF by about 850,000 shares. Bridgewater initiated its position in EWZ in the second quarter of 2012.

In the second quarter of last year, Bridgewater purchased just over two million shares of EWZ at around $56 each. Without confirmation from Dalio or Bridgewater, it is just speculation, but it appears the firm did some dollar-cost averaging with EWZ in Q4 as the ETF never traded above $56 during the quarter. With the ETF now hovering around that price area, Bridgewater may be showing a profit on the position.

Even with a stake of over 2.85 million shares, Bridgewater owns a scant percentage of the 161.1 million shares outstanding EWZ currently has.

More noteworthy is the fact that Dalio is invested in EWZ at all. Last year, EWZ was by far the worst performer of the four major ETFs tracking the BRIC nations. Year-to-date, EWZ has slid about 1.7%, due in large part to the slack performance by Petrobras (NYSE:PBR).

Petrobras, Brazil's state-run oil company, is EWZ's largest holding as two securities issued by the company combine for over 12% of the ETF's weight. That is not good news as Petrobras is extending its run as the worst-performing major global oil stock. In the past month alone, the shares have plunged 18%.

Perhaps curiously, Bridgewater has increased its exposure to Brazil (and Petrobras) in another way. At the end of Q3, the hedge fund owned over 3.33 million shares of the iShares MSCI Emerging Markets Index Fund (NYSEARCA:EEM), the second-largest emerging markets ETF by assets. The Q4 13F indicates Bridegwater's stake in that ETF jumped to over 5.67 million shares.

Petrobras is the eleventh-largest holding in EEM and Brazil is the third-largest country weight at 12.7%. But wait, there is more.

At the end of the third quarter, Bridgewater held more than 4.92 million shares of what is now the Vanguard FTSE Emerging Markets ETF (NYSEARCA:VWO), the largest emerging markets ETF by assets. The hedge fund held over 6.73 million shares of VWO at the end of last year.

Currently, VWO is tracking a transition index as it prepares to go over to the FTSE Emerging Markets Index later this year. That index features Petrobras as its fourth-largest holding and a 15.71 allocation to Brazil, according to FTSE data.

Below, find some more great ETF and market content from Benzinga:

Will Investors Find Love With Online Dating Stocks?

RIM Co-Founder Jim Balsillie Dumps Remaining Stock, BlackBerry Plunges

iOS and Android Are the Only Two Mobile Operating Systems That Matter


Twitter: @Benzinga

Benzinga Pro covers this and all market news in real time. Get your free trial here.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.