With Bridgewater’s Ray Dalio radiating a rare public persona as never before, it was up to Grant’s Interest Rate Observer to raise tough questions. In a widely read October 6 report that occupied the entire issue, Grant’s took the world’s largest hedge fund to task on a variety of financial issues that have been actively discussed across Wall Street. But does the article paint a clear picture? Or have Dalio and his unconventional methods become a target?
Ray Dalio is suddenly very public and very much a target
In a piece titled “The face on the Wall Street milk carton,” Editor James Grant and Deputy Editor Evan Lorenz dive deep into Bridgewater financial issues that have been actively bandied about by wagging tongues on Wall Street. The Grant’s article was also mentioned by Bloomberg, ZeroHedge and Dealbreaker, which gave public voice to the whisper topic: Is Bridgewater Associates, the world’s largest hedge fund, a Ponzi scheme?
The basis of this long-standing rumor has many facets and covers regulatory supervision, third-party oversight and custody of assets as well as a nest of related interests. To distill the Grant’s article into a few sentences is challenging due to the long history and nuance. At a broad level, the article touches on two primary issues that relate to investment performance and the safe custody of assets. Grant questions if Bridgewater’s performance was slipping in light of Dalio’s higher profile book promotional tour. Grant correlates Bridgewater’s performance to various traditional benchmarks such as bond and stock markets to draw these conclusions. The most intricate of the issues, however, sharply questioned custodial relationships, regulatory disclosures, investment fees and fund ownership.
In this two-part ValueWalk investigation, we dig deeper into charges and even innuendo raised by the Grant’s article. This is balanced against open source documentation on the topic as well as several on and off the record interviews with Bridgewater, Bank of New York Mellon and a regulatory lawyer who reviewed portions of the Bridgewater filings
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