Performance of Bridgewater Associates› flagship Pure Alpha Fund falls short, raising speculation that the hedge fund’s founder, Ray Dalio, may come out of retirement to regain control, much to the dismay of the new CEO.
Although Dalio retired in 2022, he retained the contractual right to take back control of Bridgewater Associates, the world’s largest hedge fund, if its performance lags.
According to Reuters data, the Pure Alpha Fund, the largest in the portfolio, returned just 2.5% through Aug. 11 this year. By contrast, the S&P 500 was up more than 16% from the start of 2023.
New York Times report
Dalio’s potential return is exactly what the current board fears, according to five anonymous current and former employees familiar with the contents of his retirement agreement. They spoke to Rob Copeland, a New York Times reporter and the author of the upcoming biography «The Fund: Ray Dalio, Bridgewater Associates and the Unraveling of a Wall Street Legend.»
«Some of them, including CEO Nir Bar Dea, who was personally appointed by Dalio, have repeatedly told him they would resign if he interferes,» Copeland reported in The New York Times, citing a total of 10 sources.
Dalio, a 74-year-old billionaire who receives an annual payout of $1 billion as part of his exit deal, has indicated in the past that he would only return to manage a separate fund, according to his biographer. The board, however, suspects that Dalio would use the proposed fund as a way to regain control, said people familiar with internal deliberations who spoke on condition of anonymity.
In response to the rumors, Dalio stated he has no plans to return and declined to answer questions about the proposed fund. When asked about tensions within Bridgewater, Dalio told Copeland that there are «arguments about things» but «love remains, like in an Italian family.»
Alan Fleischmann, responsible for communicating Bridgewater’s strategy, said the company «is grateful for everything Ray has contributed and continues to contribute as our founder, mentor and a productive board member — hopefully for many more years.» CEO Bar Dea declined to be interviewed.