On Wednesday, we noted that according to his latest newsletter, Jim Grant is bearish on Ray Dalio. And Jim’s reasoning is pretty straightforward:
Activities [like] tweeting, promoting his book, attacking the press have one thing in common: They are not investing. Yet here he is, laying it all out to the world again – necessarily doing less of his day job than he would otherwise do.
Or maybe it wasn’t straightforward. The initial reporting on this centered around Jim’s critique of Bridgewater’s performance and the extent to which mediocrity might be to a certain extent attributable to Dalio focusing more on promoting his book than managing money.
And of course, our critique of Bridgewater remains the same as it ever was. For markets in general, the only question regarding Bridgewater is this: will the correlations that underpin risk parity hold up? And if not, what happens when risk parity unwinds? Will it be, as many commentators have suggested, an aggravating factor that exacerbates an already bad situation? What happens, for instance, to a levered bond position in an environment where rates vol. suddenly spikes?
But as DealBreaker first detailed, Grant also had a thing or two to say about “transparency” or, more poignantly, a lack thereof. You can read the full post from DB here, but here’s a quick excerpt:
Long story short, we had to read this report from Grant’s. And now we have.
It reads less like a bearish take on Bridgewater than it feels like an attempt to pull back the curtain on Ray Dalio’s Mystery Kingdom in the Woods, but then finding that there are so many layers of fabric and folds that you can’t quite get a grip. Then you realize that the curtain was designed for just that purpose. And then you get really angry.[…]
The most fun little tidbit in our estimation is the “unique” relationship that Bridgewater enjoys with its auditor:
The “related party information” schedule of the Bridgewater ADV form records the fact that Bridgewa-ter lends money to its auditor, KPMG, LLC. Or, more precisely, Bridgewa- ter owners with a greater-than-10% ownership stake in the Dalio firm are creditors to KPMG.
What, your hedge fund doesn’t have a circuitous transactional relationship with the company tasked with making it behave?
