Jim Grant, author of Grant’s Interest Rate Observer, first hinted last week that not all is well when it comes to the world’s biggest hedge fund, Ray Dalio’s $160 billion Bridgewater (of which one half is the world’s biggest risk-parity juggernaut). Speaking to Bloomberg last week, Grant said he was “bearish” on Bridgewater because founder Dalio has become “less focused on investing, while the firm lacks transparency and has produced lackluster returns.”
Grant slammed Dalio’s transition from investor to marketer, and in a five-page critique of the world’s largest hedge fund, said Dalio has been preoccupied with his new book, sitting for media interviews and sending Tweets.
‘Such activities have one thing in common: They are not investing,’ Grant writes in the Oct. 6 issue of his newsletter. ‘Yet here he is, laying it all out to the world again, Tweeting, promoting his book, attacking the press — necessarily doing less of his day job than he would otherwise do.’
Grant continued his scathing critique, accusing Bridgewater of “lately performed no better than the typical hedge fund.’ Grant is right: since the start of 2012, Bridgewater’s Pure Alpha II Fund has posted an annualized return of 2.5% vs its historic average of 12%, and is down 2.8% this year through July.
The underperformance may be explainable: after all the polymath billionaire has been busy opining in recent months on subjects from the rise of populism to his affinity for China, “which are distraction from making money” Grant said.
But if Grant had limited himself to merely Dalio’s stylistic drift, it would be one thing: to be sure, the fund’s billionaire founder may simply have lost a desire to manage money and has instead discovered a flair for writing books and being in the public spotlight.
However, Grant – or rather his colleague Evan Lorenz – went deeper, and as he writes in the latest Grants letter, he raises several troubling points, which go not to the hedge fund’s recent underprofmrance – which can be perfectly innocuous – but implicitly accuse the world’s biggest hedge fund of borderline illegal activities and, gasp, fraud. Some of the more troubling points brought up by Lorenz are the following:
This post was published at Zero Hedge on Oct 11, 2017.