Texas Teacher Pension Buys Bridgewater Stake

2014-10-11

New York Times: The Teacher Retirement System of Texas just went from hedge fund investor to hedge fund owner.

Last month, the Texas pension took a $250 million stake in Bridgewater Associates, the giant money manager. Now, rather than plowing money into specific portfolios, it can claim a piece of the whole operation.

It is an unusual move for a pension. By investing directly in Bridgewater, the Teacher Retirement System of Texas can share in the upside return without paying the high costs. But the large state pension is also betting on the long-term viability of a firm whose fortunes are associated with a single enigmatic founder, Ray Dalio.

“They are essentially making a double bet in this particular firm,” said Elizabeth B. Nesvold, managing partner at Silver Lane, an investment banking adviser that specializes in asset managers. “When you think about the downside, you get a double whammy.”