Ray Dalio ceding control of Bridgewater marks a turning point for hedge funds

Yahoo Finance's Alexandra Semenova discusses the leadership transition at Bridgewater Associates after Ray Dalio stepped back and the increasing focus on succession in the financial industry.

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BRIAN SOZZI: Investors are eagerly awaiting the next steps in Bridgewater Associates' succession plan after the fund announced billionaire investor Ray Dalio would be handing over control. Yahoo Finance's Alexandra Semenova has been tracking this one for us. Alexandra, well, who is next? Who's next in line? What might we see here?

ALEXANDRA SEMENOVA: Well, Ray Dalio made sure to put a team that he trusts in place before stepping away. It was a major turning point yesterday not only for Bridgewater Associates, but also for the broader hedge fund and financial industries, really bringing into focus succession planning and what happens to some of these mega firms on Wall Street when the leaders that we know step away from them. In the case of Ray Dalio, this has been a drawn out process that has happened over the course of the last 12 years before he was finally ready to let go.

Since founding Bridgewater in 1975, he has served as CEO, CIO, and chairman before stepping away from the CEO role in 2017 and from his chairman title in 2021. Over the years, Bridgewater has experimented with some shuffling around of executives at the top before getting to a place where it is now. You can see in a note sent to staff yesterday, that intro line there says it all. It says team of the transition of Bridgewater from Ray is done, really underscoring what a multi-step process this has been for the firm.

Bridgewater's executive team now comprises co-chief investment officers Bob Prince and Greg Jensen, who, by the way, started at Bridgewater as an intern in 1996, and co-CEOs Nir Bar Dea and Mark Bertolini. Up until now, Dalio was one of three co-CIOs before finally getting to a place where he was comfortable giving over this firm that he started from scratch to be the biggest hedge fund in the world over. And even so, he says that he will continue to mentor these people. He will stay on as a senior investor and as a member of the operating board.

BRAD SMITH: This really makes you think about succession, more broadly, in the hedge fund industry. So what does this really kind of set up in conversations in other firms?

ALEXANDRA SEMENOVA: Well, this is really significant because Dalio is the first of his Wall Street cohort to fully relinquish his control of the firm that he founded. Just take a look at some of the famous fund managers that we know. Warren Buffett is still the face of Berkshire Hathaway. Steve Schwarzman is still in charge at Blackstone at age 75. So this brings into focus all sorts of questions about succession plans, not only from the perspective of these fund managers who are really reluctant to step away from them, but also from the perspective of investors who have been used to seeing these faces manage their money.

Bill Ackman, who is, of course, younger than the names above, in late August, just announced a new CIO and successor for Pershing. He made a joke that even though at 56, he still loves what he does and is in good health, he still poses a pie truck risk. So he says that he could step out and get hit by a pie truck. And he has to have a plan in place for what happens to Pershing if that happens.

BRIAN SOZZI: Hey, nobody lives forever, even billionaires. The only people who live forever is us three at this desk.

BRAD SMITH: And they can't even swerve pie trucks if they're coming to us. Thanks so much, Alexandra Semenova joining us here in studio.