The Morning Brief: Why Bridgewater’s Investors are Cheering

Ray Dalio’s Bridgewater Associates may be engaging in a minor sparring match with the media over how its controversial corporate culture is portrayed. But one group that has no complaints is the macro firm’s investors. Despite posting mixed results in its major funds last year, the world’s largest hedge fund firm generated a total of $4.9 billion in profits for its investors in 2016, according to an annual study from fund-of-funds firm LCH Investments. This is the second straight year Bridgewater has topped this ranking. Since its 1975 inception, Bridgewater has made a total of $49.4 billion for its investors, more than any other hedge fund firm.

Altogether the top-20 firms made $16.1 billion net of fees for their investors in 2016, up from $15 billion the previous year. Of the top-20, the second-biggest earner last year was Paul Singer’s Elliott Associates, operated by Elliott Management Corp., generating $3.3 billion in profits for its investors. It ranks number 10 overall.

The biggest loser last year was John Paulson’s Paulson & Company. It lost $3 billion for its investors thanks to double-digit declines in many of its funds.

Rounding out the top-five firms for net gains since their inception: George Soros’ Soros Fund Management, $41.8 billion (and now a family office); David Shaw and team’s D.E. Shaw, $25.3 billion; Seth Klarman’s Baupost Group, $25.3 billion; and Ken Griffin’s Citadel, $25.2 billion.


Shares of hedge fund favorite Apple surged more than 6 percent, to close at $128.79, after the consumer technology company posted strong fiscal first-quarter results. In response, several investment banks raised their price targets on the stock. For example, UBS lifted its target from $127 to $138, noting the company’s financial report had more positives than negatives and that it is “increasingly confident” in the company generating a stable return on invested capital and near-term growth. “Our sense has been that many long-only funds are inclined to look through March/June weakness, while some hedge funds were on the sidelines, which could create incremental buying,” UBS tells clients in a note. Even so, UBS maintained its neutral rating on the stock.


Barclays raised its price target from $117 to $123 and maintained its equal weight rating. It also raised its earnings estimates for this year but trimmed them for the following year. “The stock stands to be upward trending in the near term as investors focus on the next capital return authorization later this spring,” the bank tells clients in a note. “After that, the focus will likely return to long-term fundamentals and whether the next iPhone cycle (IP8) can drive a big or meaningful growth cycle.” Barclays says it remains skeptical. At the end of the third quarter, Apple boasted the largest number of hedge fund investors.


Ricky Sandler’s Eminence Capital bought 1.11 million shares of Tailored Brands, boosting its stake to 14.9 percent. The hedge fund firm bought the shares on January 30 for $20.05 per share. The company was formerly known as Men’s Wearhouse, a one-time Eminence activist target.


Kingdom Ridge Capital liquidated its entire stake in Applied Micro Circuits Corporation. The hedge fund sold more than 8 million shares of the chip maker on January 26, according to a regulatory filing. It did not say what price it fetched for the shares.


Two Sigma Ventures, the venture capital arm of Two Sigma, participated in a $2 million seed investment in EntryPoint, which offers a virtual reality platform to publishers and other companies.