pittsburgh
CNN
—
During the years that Pennsylvania Senate candidate Dave McCormick led one of the world’s largest hedge funds, the company invested millions of dollars in some of the state’s largest and most iconic companies, according to financial reports. I was betting.
CNN’s review of U.S. Department of Labor records shows that under McCormick’s leadership, Bridgewater Associates shorted stocks in about 50 Pennsylvania-based companies, including the Hershey Company and U.S. Steel. .
Experts say short positions essentially bet that a company’s stock price will fall, hurting the company and making it harder for it to raise new capital, invest, or hire employees. There is a possibility that For financial institutions, short positions can be profitable.
But what makes sense as an investor takes on new meaning in politics as Mr. McCormick, a Republican who is running for Senate for the second time, takes on his role as a job creator for Pennsylvanians. There is a possibility.
“Basically, I think Dave McCormick has a lack of communication with the workers,” said Mr. McCormick, who works at Hershey in central Pennsylvania and is a longtime member of the union that represents the company’s employees. Kevin Boltz said. “I don’t think this person understands my way of life.”
The Pennsylvania election, which pits McCormick against three-term Democratic Sen. Bob Casey, is crucial as Republicans try to flip the one or two seats needed to gain a Senate majority. is.
Polls last month showed Mr. Casey broadly leading Mr. McCormick. The race is one of the most expensive this cycle, with McCormick spending $4 million out of his own pocket as of the end of June.
Mr. McCormick’s time at Bridgewater and his extensive business background have emerged as central issues in the campaign. Television ads touting Mr. McCormick’s accomplishments and attacking him flooded Pennsylvania’s airwaves, and the candidates locked horns over his record in their first televised debate last week.
McCormick spokeswoman Elizabeth Gregory said in a statement that it makes no sense for Bridgewater to “handpick” individual Pennsylvania companies. Bridgewater managed more than $100 billion and also invested in businesses in the state.
“As CEO of Bridgewater, Dave led one of the most successful investment firms in the world,” Gregory said. “During his tenure, Bridgewater was a net investor of hundreds of millions of dollars in Pennsylvania companies, representing investors such as pension plans for teachers, police officers, and firefighters.”
McCormick wasn’t involved in day-to-day investment choices as CEO, she added, adding that tying him to individual shorts was “saying that the general manager of a baseball team is responsible for every pitch.” It’s the same as that.”
But as recently as last year, Mr. McCormick was solely responsible for Bridgewater’s investment decisions during his time at the helm.
“I was the CEO, so I was responsible for everything I did,” he said at a 2023 event hosted by a conservative think tank.
Mr. McCormick joined Bridgewater in 2009, became co-CEO in 2017, became sole CEO in early 2020, and left the company in early 2022.
One of Bridgewater’s funds, the Bridgewater Equity Fund, under McCormick’s leadership invested in or shorted stocks in more than 2,000 companies from 2017 to 2021. Bridgewater will be required to disclose these positions in a Department of Labor filing for retirement investment funds. CNN analyzed filings, data from the Securities and Exchange Commission and other financial records to identify the Pennsylvania-based companies that the fund sold short.
The analysis shows that during the years Mr. McCormick was at the helm, the Bridgewater Stock Fund shorted at least $16 million worth of Pennsylvania company stocks at the end of each year, and sold up to $107 million worth of Pennsylvania company stocks in December 2018. It is reported that $10,000 worth of shares were sold short. The fund’s holdings at the end of each year.
Records show the fund shorted about 40 Pennsylvania companies during Mr. McCormick’s tenure. At the end of 2018, he had shorted $25 million worth of Hershey stock. Comcast, one of the state’s largest employers, had nearly $12 million in stock at the end of 2019. Additionally, shares in Penn National Gaming, which operates casinos and racetracks across the United States, were worth more than $16 million at the end of 2021.
The fund actually invests in some of the same Pennsylvania companies’ stocks that it shorted in other years, and overall, it outperformed short sellers in four of the five annual reports reviewed by CNN. He reported spending a lot of money buying stock in Pennsylvania companies.
Bridgewater has managed more than $100 billion in the years that Mr. McCormick has led the firm, and reports showing short positions in Pennsylvania provide a window into some of the fund’s positions. A Bridgewater spokesperson declined to comment for this story.
Financial experts say short selling can play an important economic role in preventing stocks from becoming overvalued and making markets more efficient.
“Many people think of short sellers as being predatory or betting on failure, but I think there is social value in what they do,” said Andrew Jennings, a professor at Emory University School of Law. said. “There are predators in the ecosystem…but they are part of the system. They keep things in balance.”
But from a political perspective, Bridgewater’s short position in Pennsylvania company stocks could be difficult to explain because McCormick is trying to appeal to the average Pennsylvania voter. said Dan Mallinson, a professor of public policy and administration at Penn State Harrisburg.
“They’re not really investing in a company to see it grow. They’re playing the market to make money for their investors,” Mallinson said. say. “It’s probably hard to explain that to someone who isn’t super wealthy and is directly affected by what’s happening at these companies.”
Eric Talley, a corporate law professor at Columbia University, agreed that Bridgewater’s shorts could be politically problematic. Mr. McCormick had a financial responsibility to his customers to maximize the company’s profits, he said. But when Mr. Tully lectures students about fiduciary responsibility, “their eyes start to glaze over,” he says. “I get really nervous when I’m expecting their votes.”
One of the most politically sensitive companies that Bridgewater shorted under McCormick was U.S. Steel, a storied manufacturing company that operated four major plants near Pittsburgh. Bridgewater Equity Fund invested in the company’s stock from 2017 to 2020, with investments totaling approximately $67 million as of December 2018, records show.
But by the end of 2021, McCormick’s last full year as CEO, the fund had sold its holdings in U.S. Steel, shorting more than $6 million in the company’s stock. At the same time, it reported that it had invested nearly $4 million in stock in Nippon Steel, Japan’s largest steelmaker, and was currently trying to acquire U.S. Steel.
Bridgewater’s shorting of U.S. Steel stock was previously reported by Pennsylvania-based liberal news site Keystone.
During his election campaign, McCormick posted on X that he blasted the proposed sale of U.S. Steel to a Japanese company, calling it “a tragedy for our country and a terrible thing for the national security of the United States.” said. Mr. Casey also opposes the deal, which is currently underway. It has not been subject to regulatory review and could be blocked by the Biden administration.
Bernie Hall, Pennsylvania director of the United Steelworkers, the union that represents U.S. Steel employees and is supporting Mr. Casey in the Senate race, said Bridgewater’s bet on Pennsylvania companies was a big deal for employees. McCormick’s efforts to win votes are inconsistent with his efforts.
“It’s very nerve-wracking to be someone who does something like that, who has the courage to run for office and ask for votes from people who were betting that they would fail,” Hall said. he said.
McCormick spokesman Gregory said Bridgewater employees do not individually choose which stocks to take long or short positions in, but instead make decisions about broader buckets of companies. Ta. She argued that Bridgewater’s short positions in Pennsylvania companies did not have a negative impact on employees because they represented only a small portion of each company’s overall value.
And she pointed out that while Casey served as Pennsylvania state treasurer from 2005 to 2007, the state’s retirement system held investments through Bridgewater. Mr. Casey was one of 11 board members overseeing the retirement plan.
The short position is just one example of how Mr. McCormick’s past business dealings generated negative headlines during his political career. Both in his first bid for the Senate in 2022 and during this campaign, he has faced criticism over Bridgewater’s past investments in Chinese military companies that were later sanctioned by the U.S. government.
Last year, Mr. McCormick told a Congressional committee that he had “deep reservations about the moral and patriotic risks that Bridgewater faces by doing business in China, and is often at odds with key colleagues over the course of China.” I did,” he said.
Local media also said McCormick helped create hundreds of jobs as head of a Pittsburgh-based software company in the early 2000s, and that his leadership at that company influenced television ads on both sides of the campaign. This casts doubt on his claims.
McCormick is among this year’s Republican Senate candidates, including Eric Hovde of Wisconsin, Tim Sheehy of Montana and Bernie Moreno of Ohio, who have never held public office. , who is trying to turn his career as a wealthy businessman into political success.
Mallinson, a professor at Penn State University, said the criticism of McCormick is emblematic of how candidates who base their campaigns on business backgrounds can be a double-edged sword.
“That can be an advantage or a disadvantage,” Mallinson said, adding that businesspeople will someday make decisions without considering how they will explain their choices to voters. “If you’re in business, you probably don’t think about the political implications down the road.”
