Ray Dalio Goes Bullish on Disney Stock
Walt Disney Co (NYSE:DIS) just gained a powerful ally. Regulatory filings show that Ray Dalio, a billionaire hedge fund manager based out of Connecticut, is loading up on Disney stock. Should you be equally bullish on Disney stock?
Dalio is the founder of Bridgewater Associates, which you may not have heard much about. It is one of the most secretive hedge funds in the world—some people even think it is a cult.
The Wall Street gossip mill is always buzzing with weird rumors about Bridgewater, but no one contests the fact that Dalio and his disciples are moneymaking wizards.
Bridgewater’s success at managing money has turned it into the world’s biggest hedge fund. It has reached gargantuan proportions, with $150 billion of assets under management. That’s a heck of a lot of money.
As a result, people keep a close eye on whatever Ray Dalio is buying. One of the highlights from disclosure forms is that Bridgewater has been buying Disney stock.
The firm scooped up 210,300 shares of DIS stock as of March 31. It is a tidy little stake that cost Bridgewater about $15.8 million. (Source: “Bridgewater Associates 13F Filing,” Securities and Exchange Commission, May 16, 2016.)
Today, that same position is worth approximately $21.1 million, meaning that Dalio earned a 34% return in just two-and-a-half months.
What made him think it was a good time to buy?
Simple: investors were worried about losses from ESPN, the firm’s sports network. In the last few years, ESPN has lost millions of subscribers, as “cord-cutting” grows ever more popular. Viewers are migrating online instead of keeping their cable subscriptions. Naturally, investors are worried those losses could significantly damage Disney’s outlook.
Dalio took advantage of those concerns, because he believes (as do I) that both ESPN and Disney are going to be fine. The losses are only temporary.
I’ve always maintained that whoever owns content wins in the end. As long as ESPN has the rights to broadcast Monday Night Football, does it really matter if some viewers are cutting the cord?
They still want to watch football; they just don’t want to pay for a bundle that includes other channels they’ll never watch. ESPN could draw them back into the fold by releasing a standalone app, an a la carte cable package, or an online streaming subscription. There are so many ways for the company to stem the bleeding.
Meanwhile, Disney’s other properties are doing incredibly well. Marvel keeps churning out a steady stream of superhero hits, and LucasFilms has restarted the Star Wars franchise.
All those successful movie franchises are being extended to theme parks and merchandising, so the returns are monumental. Disney has consistently made the right strategic plays, making me confident it can fix the ESPN situation.
Clearly, Dalio wasn’t too bothered by the ESPN troubles or he wouldn’t have bought so much Disney stock. He was able to cut through the negative attention and see what I’ve been saying for months: that Disney is one of the most phenomenal companies in existence.