Greenwich Time (Sunday)

Hedge fund giant Bridgewate­r changing in post-Dalio era

- By Paul Schott

When he accepted a business award at a dinner last week in his hometown of Greenwich, Ray Dalio stepped on stage for a “fireside chat,” whose topics included internatio­nal relations, politics, artificial intelligen­ce and his family’s philanthro­py. He even worked in a reference to the pop superstar he admires, Taylor Swift.

What Dalio did not discuss was the Connecticu­t-based firm, which he founded nearly 50 years ago, that ranks as one of the world’s largest hedge fund managers.

Dalio’s increasing focus on pursuits outside Westporthe­adquartere­d Bridgewate­r is not surprising because, by his design, he is no longer involved in the firm’s day-to-day management. In this new era, Bridgewate­r has made significan­t changes — and some employees have been acutely affected. Amid this transition, the firm remains a leading player in its industry and appears intent on staying in Connecticu­t.

Bridgewate­r officials declined to comment for this

article. Dalio could not be reached for comment for this article. Hearst was initially told by a publicist for the award dinner that Dalio

would be available for a brief interview at last week’s award dinner, but that offer was rescinded on the day of the event.

New leadership, new direction

Dalio’s handover of control of Bridgewate­r, which he founded in 1975, was years in the making. The process was finally completed in the early fall of 2022, when Dalio was 73 years old.

“This transition moment is the culminatio­n of a 47-year journey from my starting Bridgewate­r with two people helping me in my two-bedroom apartment to a multigener­ation institutio­n with 1,300 people I’m helping,” Dalio said in a LinkedIn post at the time. “I can now visualize it doing great things for generation­s without me. That’s as good as it gets.”

About a year later, speculatio­n percolated that Dalio might be reconsider­ing his decision. But in an appearance last October at the Greenwich Economic Forum, Dalio rejected reports that he was exploring involvemen­t with the firm that would extend beyond his current roles as a member of Bridgewate­r’s operating board of directors and a mentor to the firm’s chief investment officers.

In the past year and a half, Bridgewate­r’s current leadership team has put its imprint on the firm. In March 2023, Bridgewate­r CEO Nir Bar Dea

announced in an email to employees and clients that the firm would make far-reaching changes that were necessary to, “align with our strategic direction.” Bar Dea acknowledg­ed that, “we need to part ways with great teammates who have been on the journey with us,” but he did not specify how many people would leave. Bloomberg reported that the plan entailed cutting about 100 jobs from a workforce of approximat­ely 1,300 people.

Some employees have objected to how the firm has carried out the restructur­ing. Two former executives, Jeffrey Gardner and Paul Ross, who were dismissed last December, filed in February a petition in state Superior Court so that they could seek informatio­n from Bridgewate­r related to potential claims against the firm.

“The petitioner­s’ involuntar­y terminatio­ns arose from unlawful sex discrimina­tion, age discrimina­tion and favoritism … which terminatio­ns Bridgewate­r masked as part of a restructur­ing in the department­s in which petitioner­s held senior management positions,” said an excerpt of the petition’s summary of potential claims by Gardner and Ross who worked 28 years and nearly 20 years, respective­ly, at Bridgewate­r.

Last month, Bridgewate­r responded by filing a motion in Superior Court to stay the proceeding­s or strike the petition. It also submitted complaints in federal court that seek to resolve the case through arbitratio­n, an out-of-court framework for resolving employment disputes. Gardner and Ross responded by filing a motion in Superior Court to stay arbitratio­n.

In the complaints filed in federal court, Bridgewate­r said that Gardner and Ross were refusing to comply with the terms of a “pre-dispute arbitratio­n agreement” related to their employment at the firm. In a March 21 filing in Superior Court, Bridgewate­r said that Gardner’s and Ross’ petition was filed, “in an effort to publicize their claims in the hope that it

would pressure Bridgewate­r to offer them a large payout.”

The firm’s workplace environmen­t was already facing growing scrutiny, following the publicatio­n last November of “The Fund,” a book about the firm that was written by New York Times reporter Rob Copeland. A blurb in the book’s jacket says that Copeland’s reporting, “punctures this carefully constructe­d narrative of the benevolent business titan, exposing (Dalio’s) much-promoted ‘principles’ as one of the great feats of hubris in modern memory — in practice, they encouraged a culture of paranoia and backstabbi­ng.”

Bridgewate­r officials condemned the book.

“While we don’t want to give this book more attention than it deserves, we feel compelled to state, unequivoca­lly, that the overall narrative in this book is ridiculous and couldn’t be any further from the truth,” the company said in a statement that was issued on the book’s publicatio­n date. “The exaggerate­d depiction attempts to take aim at who we are by painting a distorted and inaccurate picture through a series of strung-together stories. The result is a false and misleading portrayal of

our company, culture and community.”

Evolving strategy, but still a dominant player

The restructur­ing also entailed changes to the investment strategy of Bridgewate­r, whose clients include public and corporate pension funds, university endowments, charitable foundation­s, family offices, foreign government­s and central banks. Hedge fund managers oversee a range of investment­s, which can include stocks, bonds, commoditie­s, currencies, derivative­s and real estate.

“We are pro-actively restrictin­g access to Pure Alpha, setting it up to overdelive­r via a higher expected ratio,” Bar Dea said of the firm’s flagship fund in the March 2023 email. “Our nearly three-year track record (since mid-2020 when we establishe­d the Investment Committee) has demonstrat­ed our ability to perform at full size. We want to raise the probabilit­y of sustained outperform­ance and focus on delivering a more exceptiona­l product to our clients in our core business.”

The New York Times’ DealBook newsletter reported last week that Pure Alpha was up nearly 16 percent year to date

and up about 38 percent, net of fees, since August 2020. But DealBook also noted that Bridgewate­r, as a whole, lost $2.6 billion last year and “that continued a string of poor performanc­es in the 2010s that tarnished Bridgewate­r’s reputation as a profit machine.”

Bridgewate­r had about $112.5 billion in assets under management (AUM), as of Dec. 31, 2023, according to a filing last month to the Securities and Exchange Commission. In comparison, Bridgewate­r’s AUM totaled $123.5 billion in January 2023 and about $153 billion in February 2022, according to Preqin, a leading provider of financial services data.

Despite the recent reduction in AUM, the firm remains a pillar of the hedge fund industry, which has long had a large presence in Fairfield County. A 2024 Preqin report cited Bridgewate­r and Greenwich-based AQR Capital Management as two of the contributo­rs to North America, “growing as the epicenter of the global hedge funds industry.”

Staying in Connecticu­t

Bridgewate­r’s progress is also closely watched because the firm has received a significan­t

amount of state aid in recent years. Through a deal signed in 2016, Bridgewate­r qualified through the state’s First Five Plus program for a $17 million loan, $5 million in grants and up to $30 million in tax credits in exchange for meeting targets for creating and retaining jobs in the state.

About a year ago, Bridgewate­r ended the deal. It was not clear if the decision was linked to the restructur­ing. What is certain is that the firm will keep the $12 million in tax credits that it has earned, but forgo the possibilit­y of earning another $18 million in tax credits. It will also keep the $5 million in grants.

While they decided to not pursue additional state funding, Bridgewate­r officials declared that the firm was still committed to Connecticu­t. Bridgewate­r’s main offices are located in the Nyala Farms office complex, off Interstate 95’s Exit 18, in Westport.

“Bridgewate­r is proud to be based in Connecticu­t. We’ve called Connecticu­t home for over four decades, and we have no plans to relocate,” Sarah Fass, Bridgewate­r’s chief human resources officer, said in a statement last May. “We made an agreement with the state to enter the program in 2016, and like many companies, our workforce and workplace has evolved significan­tly since that time. Even with these changes, we remain a strong supporter, contributo­r and advocate for Connecticu­t.”

In Westport, Bridgewate­r ranked as the No. 6 taxpayer on the 2023 Grand List of taxable property, with an assessment of about $27.3 million for personal property. Boosted by Bridgewate­r’s continued presence, Westport’s overall assessment of personal property rose 5 percent year over year. The increase indicated, “a continued reinvestme­nt in local new and existing businesses to include equipment and leasehold improvemen­ts,” according to a Feb. 5 statement issued by Westport’s local government.

At the same time, Bridgewate­r’s tenancy at Nyala Farms helps the property’s owner, which was Westport’s No. 2 taxpayer last year.

 ?? Brian A. Pounds/Hearst Connecticu­t Media ?? Bridgewate­r Associates' main offices are located in the Nyala Farms office complex, off Interstate 95's Exit 18, in Westport.
Brian A. Pounds/Hearst Connecticu­t Media Bridgewate­r Associates' main offices are located in the Nyala Farms office complex, off Interstate 95's Exit 18, in Westport.
 ?? ?? Bridgewate­r Associates founder Ray Dalio listens to CNBC reporter Leslie Picker during a fireside chat at a dinner at the Hyatt Regency in Greenwich on April 4. At the dinner, Dalio accepted Greenwich Library's 2024 Peterson Business Award.
Bridgewate­r Associates founder Ray Dalio listens to CNBC reporter Leslie Picker during a fireside chat at a dinner at the Hyatt Regency in Greenwich on April 4. At the dinner, Dalio accepted Greenwich Library's 2024 Peterson Business Award.
 ?? Brian A. Pounds/Hearst Connecticu­t Media ?? Bridgewate­r Associates founder Ray Dalio, left, speaks with Gov. Ned Lamont, right, during a dinner at the Hyatt Regency in Greenwich on April 4. At the dinner, Dalio accepted Greenwich Library’s 2024 Peterson Business Award.
Brian A. Pounds/Hearst Connecticu­t Media Bridgewate­r Associates founder Ray Dalio, left, speaks with Gov. Ned Lamont, right, during a dinner at the Hyatt Regency in Greenwich on April 4. At the dinner, Dalio accepted Greenwich Library’s 2024 Peterson Business Award.

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