McCormick’s hedge fund days are a double-edged sword in Pennsylvania Senate race

HARRISBURG, Pennsylvania. – Before running for the US Senate in Pennsylvania, David McCormick was a big name on Wall Street.

He was the chief executive of the world’s largest hedge fund, a world-traveling executive in demand as a lecturer and board member.

His wealth and connections made him seen by Republicans as someone who could raise campaign funds and pay his own expenses for a Senate campaign.

But McCormick’s days on Wall Street have not been so valuable lately. They were a resource for attacks from Republican primary rivals during McCormick’s failed 2022 Senate bid and now from Democrats in their challenge to third-term Sen. Bob Casey.

Casey, in speeches and ads, has criticized investments made by Bridgewater Associates while McCormick was CEO, including in Chinese companies considered part of Beijing’s military-surveillance industrial complex.

“While I was fighting for union rights and for Pennsylvania’s working families, he was making a lot of money investing in China,” Casey recently told a union crowd at a Teamsters hall in a Harrisburg suburb. “Not only did he invest in Chinese companies, he invested in companies that built the Chinese military.”

McCormick declined an interview request.

The need to defend himself against accusations that he benefited at the expense of the United States comes at an unfortunate time for McCormick, as China’s relationship with Washington has become increasingly strained.

But Bridgewater was not alone.

U.S. investment in Chinese companies increased while McCormick was CEO of Bridgewater, as hedge funds, institutional investors and money managers poured money into those same companies.

Some still do, according to a congressional report released this year after the Trump and Biden administrations sought to block U.S. investment in what they viewed as China’s military and surveillance apparatus.

The U.S. political community turned its back on China as early as 2016, but the U.S. financial sector “has moved past it with ease,” said Derek Scissors, a China specialist at the American Enterprise Institute in Washington who served on the U.S.-China Economic and Security Review Commission.

The economic ties extend beyond Wall Street. Semiconductor companies, farmers, technology firms and others in the manufacturing sector rely on China for customers or components, Scissors said.

As Bridgewater’s chief executive in 2019, McCormick described China as the “most defining bilateral relationship of our time” for the United States, even as calls began in Washington to block U.S. investments in Chinese companies that might pose a threat to U.S. security.

As a candidate, McCormick has described China as an “existential” threat to the United States. He called for the federal government to develop a comprehensive strategy for the U.S. to overtake China economically and technologically, and said his experience with China means he can go “toe-to-toe” with the U.S. administration on trade issues.

But McCormick also defends himself, downplaying Bridgewater’s investments in China, saying they were 2% of the company’s assets, and describing investment in China as “inevitable” because of customer expectations and the country’s rapidly growing economy.

In a book he published last year, he wrote: “As things stand, U.S. dollars finance Communist China’s most heinous acts and ambitions.”

During the campaign, McCormick barely talks about his time at the hedge fund. If he mentions it, he tells the public that he ran a “financial firm” or an “investment firm.”

Instead, he focuses on other highlights on his resume, including playing football and wrestling in high school, graduating from the U.S. Military Academy at West Point and serving in the Army in the first Gulf War, where he earned a Bronze Star.

But if he’s not praising his Wall Street days, Wall Street doesn’t seem to care. In his two Senate campaigns, McCormick’s super PACs have raised tens of millions of dollars from the financial world, and the number keeps rising.

McCormick, 59, earned a doctorate from Princeton University, ran the online auction house FreeMarkets Inc., whose name was on a Pittsburgh skyscraper during the tech boom, and held senior positions in the administration of President George W. Bush.

There, he likes to say, he earned a reputation as a tough negotiator with the Chinese when he was tasked with Commerce Department policy on export controls on sensitive technologies.

When Bridgewater Associates hired McCormick to be president in 2009, its founder, Ray Dalio, had a reputation for being bullish on China.

Today, Bridgewater is as prominent as any other foreign-invested company in China.

Regulatory disclosures in China show the country has at least 10 billion renminbi — or at least $1.4 billion, and perhaps much more — invested in Chinese assets there, said Harry Handley, a senior associate at Z-Ben Advisors, a financial advisory firm based in Shanghai.

That’s the largest amount ever raised by any foreign company, Handley said.

McCormick, who was a Bridgewater executive for 12 years, joined the company as investment banks, venture capital firms and hedge funds were driving an investment boom in a growing Chinese economy.

“The Chinese economy was doing well for a long time and there was money to be made there,” said Greg Brown, a finance professor at the University of North Carolina at Chapel Hill who researches hedge funds.

McCormick spent his final five years at Bridgewater as co-CEO or CEO, and those were important years for investing in China. That was when Chinese regulators relaxed restrictions on foreign investment in stocks and bonds, triggering several years of particularly intense investment, Brown and others say.

Bridgewater gained a reputation among foreign firms as an aggressive investor in Chinese companies — “they’ve dominated global companies in China in recent years,” Handley said — and allegedly handled money for the Chinese government.

In early 2022, McCormick left Bridgewater to run for Senate in Pennsylvania in a seven-candidate Republican primary.

Bridgewater’s connections to China followed him.

In a swipe at a Republican primary rival, a video from Mehmet Oz’s campaign showed “finance brothers” Chad and Tad at a bar when Tad asks Chad, “Do you think saying ‘I invest in China’ is a good pick-up line?” Chad replies, “Investing in foreign adversaries always works!”

At a rally days before the 2022 primary, former President Donald Trump, seeking to help his endorsed candidate Oz, mocked McCormick for having worked for a company that “managed money for Communist China.”

McCormick narrowly lost to Oz.

This summer, Casey’s campaign launched two ads that aired in major Pennsylvania television markets attacking McCormick over Bridgewater’s investments in companies linked to China’s military.

“Dave McCormick sold us out to make a fortune,” say helmeted speakers in one ad. “That’s the real Dave McCormick.”

McCormick has attempted to link Casey to China, saying Casey had money invested in Chinese companies through mutual funds and that clean energy policies supported by Casey under the Biden administration are making the U.S. more dependent on Chinese lithium batteries and solar panels.

Meanwhile, each candidate is trying to show that he is tougher on China, which has brought into sharp relief the contrast between McCormick, the CEO, and McCormick, the candidate, as McCormick has explicitly called for an end to U.S. investment in technologies in China that are critical to national security or linked to its military.

“McCormick has changed his mind because he is a politician,” Scissors said. “If he were in the business community, he would continue to push for relations with China. Because that is what they do.”

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Follow Marc Levy at https://x.com/timelywriter.