Former US Ranger ready to take command at Bridgewater

A decade ago Bridgewater founder Ray Dalio set out to convince David McCormick, a former US Treasury official, to join his $160bn hedge fund. Over dinner, Mr Dalio told him that there were “very high odds” of him succeeding — and put them at about 50 per cent.

Despite odds that some would see as insulting, Mr McCormick was intrigued. Mr Dalio was just beginning his decade-long succession plan at the firm that he founded in 1975 and wanted executives who would one day take over its management.

Mr McCormick, a staunch Republican, had resigned from George W Bush’s administration at midnight before President Barack Obama took over. After spending several months mulling his next move, including running for office in his native Pennsylvania, he agreed to join the fund that trades currencies, bonds and equities.

This week Bridgewater announced that Mr McCormick will become the firm’s first sole chief executive early next year, as his co-chief executive Eileen Murray departs. After rounds of demotions, promotions and oustings in the hedge fund’s top ranks, Mr McCormick has outlasted every senior executive without direct investing responsibilities.

Mr McCormick has trodden an unlikely path to high finance.

After graduating from West Point, he became an Army Ranger and served in the Gulf war. A PhD in international relations at Princeton, a spell at management consultants McKinsey and a stint running a software company all followed before he joined Mr Bush’s second administration in 2005.

He rose to become under-secretary for international affairs at the US Treasury and, more recently, reportedly declined an offer to be US deputy secretary of defence in President Donald Trump’s administration.

He’s as pleasant and level-headed when the financial system is crashing down as on a relaxed lunch for my birthday

His rise through the ranks of the Connecticut-based hedge fund known for its almost cult-like culture is striking given that colleagues describe him as someone who values efficiency, organisation and decisive meetings.

At Bridgewater, all meetings are videotaped for review, performance is graded in real time and, according to Mr Dalio, employees use a “pain button” app to signal unhappiness. Former employees say its policy of “radical transparency” and love of debates has led to high staff turnover and interminable meetings.

That is not Mr McCormick’s style.

“He is someone who likes people who get to the point quickly,” said Mark Sobel, a former colleague at the US Treasury. Mr McCormick also has an affinity for McKinsey-style planning matrices. “Everyone at Treasury remembers him for his matrices and PowerPoints,” said Mr Sobel.

Mr McCormick has brought this approach to Bridgewater, where he has focused heavily on business development, leaving its investing activities to a trio of co-chief investment officers, led by Mr Dalio.

BlackRock chief executive Larry Fink, who knows Mr McCormick from his time at the Treasury, said he “brings calmness to a place that wasn’t always associated with that”.

“Bridgewater has become much more institutional under David,” he added.

Sometimes the Army Ranger in him shines through. Mr McCormick once took Mr Dalio on a day-long visit to a Ranger training patrol in the Florida Everglades. They started the day with a 5am flight and returned to Bridgewater at 4am the next day, hours before a management meeting. After seeing how the Rangers trained, Mr Dalio joked that perhaps Bridgewater was too easy on its employees.

Mr McCormick may not share Mr Dalio’s rock star status in the hedge fund world, or the fierce loyalty Ms Murray enjoys at the firm. But his connections in the upper echelons of government and finance have stood him in good stead as one of the firm’s external ambassadors, travelling around the world to meet investors, regulators and central bankers.

He is also half of one of finance’s top power couples by virtue of his recent marriage to Dina Powell, the Goldman Sachs executive best known for a year-long stint with the Trump administration. Like Ms Powell, Mr McCormick has earned a reputation as a sort of roving diplomat with more acumen for global policy than the minutiae of investing.

Bank of England governor Mark Carney said he has “huge respect” for Mr McCormick after working closely with him during the financial crisis. He is good at “grasping the major issues, not becoming wedded to one solution or with any confirmation bias, and then coming to a decision . . . He’s as pleasant and level-headed when the financial system is crashing down as on a relaxed lunch for my birthday.”

Following this week’s management change, Mr Dalio asserted that Bridgewater’s transition to the next generation is now “complete”.

But the true test for Mr McCormick — to prove that Bridgewater can ultimately survive beyond its founder — is yet to come.