The Inquirer provides a deep dive into the latest source of in-fighting for the country’s nastiest primary
PENNSYLVANIA – New reporting from the Philadelphia Inquirer, which was featured on today’s front page, dives into the poor management of the Public School Employees’ Retirement System’s (PSERS) pension fund by Bridgewater while Connecticut hedge fund manager David McCormick was in charge.
New Jersey daytime TV host Mehmet Oz has jumped on the development, hitting McCormick in a direct to camera video and making sure it becomes a key issue in the country’s most expensive and nastiest primary.
See below for highlights from the Inquirer’s article and read the full story here:
- At the peak, the PSERS retirement plan gave almost $5 billion to Bridgewater Associates to invest, paying it among the plan’s highest fees, as well — nearly $700 million since 2004. Bridgewater was the plan’s biggest outside money manager.
- Bridgewater’s former chief executive David McCormick is proud of his years there. On his website touting his candidacy to represent Pennsylvania in the U.S. Senate, McCormick says he led “one the most successful investment management companies in the world.” But the PSERS pension fund has not always shared in that success.
- In the last two years, PSERS, the $75 billion Pennsylvania’s Public School Employees’ Retirement System, has massively cut its stake with Bridgewater, citing poor results.
- Now, rival Republican candidate Mehmet Oz, who polling says is McCormick’s closest competitor in the GOP primary, is using his company’s record against him. “Dishonest David got rich, we got stuck with the bill,” he declared at a March 15 news conference outside PSERS headquarters.
- PSERS would have earned a lot more over the years by putting the money into U.S. stocks, with much lower fees, instead of sending it to Bridgewater with its hedge fund strategies.
- “This did terrible,” Thomas Bauer, a top PSERS investment expert, told its board that year, “which should make us mad. A manager we paid a lot of money to was supposed to do well in a crisis.”
- Not coincidentally, Bridgewater has charged the pension plan among the highest rates the system pays, according to a study by another consultant. Verus Capital Partners, based in Seattle, told the board earlier this month that Bridgewater’s fees, as a percentage of money invested, dramatically exceeded more than 50 other comparable funds.
- For PSERS’ investment cadre, Westport has been a common destination. About 20 members of the staff have run up charges of about $23,000 in Bridgewater-related travel. Many have headed to Connecticut, while a few have also headed to Bridgewater-sponsored sessions in Beverly Hills, Beijing, and Hong Kong.
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