Hedge fund giant Bridgewater changing in post-Dalio era
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would be available for a brief interview at last week’s award dinner, but that offer was rescinded on the day of the event.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.