Bridgewater Associates, the world’s largest hedge fund by assets and Westport’s largest private employer, has announced a firm-wide “renovation” that will include employee layoffs, according to someone familiar with the matter, CNBC reported today.
In a letter to clients, officials at the $150 billion-asset company said it was “digging into the areas of inefficiency to improve them” as part of a “renovation to improve efficiencies at Bridgewater,” the cable business news network reported.
That process will involve “significant changes to people, processes, and technologies,” it added.
At a town hall meeting held earlier today, Bridgewater executives warned that those changes would include layoffs. Business Insider published the letter, and reported on the plans, at midday, CNBC said.
A Bridgewater spokeswoman could not comment on the scope of the planned layoffs at the 1,700-person company, which has grown from a staff of just 150 in 2003, the report said.
According to the letter, however, most of the planned renovation would occur outside the company’s investments division.
This has been a mixed year for Bridgewater, which is in the midst of a broader leadership transition.
One of the firm’s flagship funds is down more than 9 percent, and the other is up 13 percent through Sept. 9, according to someone familiar with the results, CNBC said.
A third fund, established last year to blend the flagship funds’ strategies into a single vehicle, this person has added, is flat through that same time period.
Despite that, Bridgewater has taken in $22.5 billion in new client investments since 2015.
Asked about those inflows at CNBC and Institutional Investors’s annual “Delivering Alpha” hedge-fund conference in New York City on Tuesday, Bridgewater founder Ray Dalio noted that in such volatile markets, his goal was to stay six months or even just six days ahead of events.
“The market environment will always be exciting,” he said, “the question is whether you’re adding value or not – most importantly, whether we’re going to add value in a bad time.”
Here is the text of a letter sent to Bridgewater clients, as reported by Business Insider. It is signed by Dalio, co-CIO Bob Prince, co-CIO Greg Jensen, co-CEO Eileen Murray, president David McCormick, and co-CEO Jon Rubinstein.
“Dear —,
In a town hall meeting with employees today, we conveyed to the company that we will be conducting a renovation to improve efficiencies at Bridgewater, especially in the non-investment areas such as Technology, Recruiting, Facilities, and Management Services.
In the past, we made these sorts of internal changes privately and wouldn’t have bothered telling you about them as you won’t be directly affected. However, we decided to bring them to your attention because we have recently experienced distorted reporting in the media about what is happening at Bridgewater, so we want to provide you the real story.
To be clear, this renovation is coming at a time when our fundamentals are very strong: Our investment process is better than ever, our financial position is rock solid, our key employees who built the firm wouldn’t want to work anywhere else, and our clients remain confident in us (as expressed in their collectively investing $22.5 billion in new money since 2015). We are making these changes as a part of the ongoing process of constant improvement that has been the key to our success over the past 40 years.
Background
As you know, about a decade ago, our assets under management were growing rapidly and Bridgewater’s leadership faced a choice: to remain a boutique or become an institution. To institutionalize Bridgewater meant building out areas of the company that a boutique doesn’t have or only modestly has, such as Security, Technology, HR, Facilities, Legal, etc. Building out those areas required us to hire a lot of people.
As a result, we grew dramatically. In 2003 Bridgewater had 150 employees; in 2011, when we began our management transition, we had 1,100; now we have 1,700. About 70% of this growth in headcount was in our non-investment areas. As one might expect, some of these areas became bloated, inefficient, and bureaucratic. As you know from dealing with us, we want to have pervasive excellence.
To deal with this situation, earlier this year, we realigned our management team to help push through needed improvements. These changes included Ray temporarily stepping back into active management of the firm as co-CEO, joining the existing senior management of Eileen Murray (co-CEO, who has been helping lead the company since 2009) and David McCormick (President, who has likewise been helping lead since 2009). We also brought in Jon Rubinstein as a co-CEO and made some other management changes. An added benefit of this shift was that it allowed Greg Jensen (who has been at Bridgewater 20 years) to devote his full attention to his role as co-CIO along with Ray and Bob Prince (who has been here for 30 years). These shifts in management roles were consistent with our plan to figure out how to best transition the leadership of the company over 10 years. (We are now 5 years into that plan.)
The new management leadership is now digging into the areas of inefficiency to improve them. Naturally that will involve some significant changes to people, processes, and technologies. As mentioned, the vast majority of this renovation will be in the non-investment areas that have seen the most growth to make them more effective in supporting our investment and client service areas.
As always our evolutionary process will be imperfect, iterative, and transparent, and it will make us more efficient.
What is of paramount importance is our sticking to the culture that has led to our excellent results. It is best summarized in the following sentence: We want meaningful work and meaningful relationships through radical truth and radical transparency. Transparently bringing problems to the surface and regarding them as intolerable might lead some people to wrongly conclude that we have more problems than organizations that don’t transparently bring problems to the surface. Our employees and our clients understand that this difference is essential to our success. It is also through this radical truth and transparency that they have learned to trust our integrity as well as our abilities.
As always, if you have any questions, let us know.
With appreciation for your understanding,
Ray, Bob, Greg, Eileen, David, and Jon”
