From Institutional Investor, October 12:
Ray Dalio’s firm has refuted a critique in a popular Wall Street publication of the hedge fund’s performance and business practices
One of the most well-known writers on Wall Street has taken aim at the world’s largest hedge fund firm — and the firm is fighting back.
Jim Grant, editor of the widely-read publication Grant’s Interest Rate Observer, wrote in an October 6 piece that he is bearish on Ray Dalio’s Bridgewater Associates, which manages more than $160 billion in assets on behalf of some of the world’s largest public pension plans, sovereign wealth funds, and other significant institutional investors. A Bridgewater spokesman countered in an e-mailed statement to Institutional Investor on Thursday that the Grant’s story is “inaccurate and misinformed.”
In the piece, entitled “The face on the Wall Street milk carton,” Grant cited a number of factors for his skepticism, including recent lackluster performance and management turmoil in the front office. He also took issue with several of the firm’s relationships with its service providers — criticisms that some industry participants, including well-known alternative investment consultancy Aksia, said were far off-base.
The article was first published last week but gained traction on Twitter on Wednesday and Thursday after being circulated via email among industry watchers.
“Nobody knows when today’s credit-enhanced, central-bank-infused, interest-rate-inflated updraft in asset prices will run its course, still less the name of the firm with which history will associate that inflection point,” Grant wrote. “For the latter distinction, Grant’s is penciling in the name of the firm that Dalio built.” (Grant did not return a request for comment.)
In its statement, Bridgewater responded, “This reporting is devoid of proper fact checking, lacks a basic understanding of the rules, regulations and processes of the securities industry, and is demonstrably false.”
[II Deep Dive: Inside the Walls of Bridgewater Associates]
Aksia, which advises institutions on their investments in hedge funds and other alternative investment strategies, said the story’s interpretation of specific disclosures Bridgewater has made about its service providers betrayed a lack of understanding about “disclosure filings, as well as how the plumbing of the hedge fund industry works,” according to Jim Vos, chief executive of Aksia. The firm has clients who are invested in Bridgewater.Previously:
Grant also critiqued Bridgewater’s recent performance, writing that the firm has lately produced “mediocre returns” at the same time that Dalio has been spending significant time promoting his new book, Principles, via media appearances and Twitter. Those appearances include an interview at the CNBC/Institutional Investor Delivering Alpha conference and a video interview with Institutional Investor....MUCH MORE
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