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In the years that Pennsylvania Senate candidate Dave McCormick led one of the world’s largest hedge funds, the firm bet millions of dollars against some of the state’s biggest and most iconic companies, financial filings show.
Under McCormick’s leadership, Bridgewater Associates shorted the stocks of nearly 50 companies headquartered in Pennsylvania, including The Hershey Company and US Steel, a CNN review of records from the US Department of Labor found.
Short positions, which are essentially bets that the companies’ stocks will drop, can hurt corporations by depressing their stock prices, making it harder to gain new financing, invest or hire more workers, according to experts. For financial institutions, short positions can be lucrative.
But what makes sense as an investor can take on new meaning in politics as McCormick, a Republican making his second bid for Senate, casts himself as a job creator for Pennsylvanians.
“Fundamentally, I think Dave McCormick is out of touch with workers,” said Kevin Boltz, who works for Hershey in central Pennsylvania and is a longtime member of the union that represents the company’s employees. “I don’t think this man understands my way of life.”
The Pennsylvania race – a face-off between McCormick and three-term Democratic Sen. Bob Casey – is crucial as Republicans try to flip the one or two seats they need to win control of the Senate.
Casey has generally led McCormick in polling over the last month. The race is among the most expensive this cycle, with McCormick spending $4 million of his own money as of the end of June.
McCormick’s time at Bridgewater and his broader business background has emerged as a central issue in the race. TV advertisements both touting McCormick’s accomplishments and attacking him have flooded Pennsylvania’s airwaves, and the candidates sparred over his record in their first televised debate last week.
In a statement, McCormick spokesperson Elizabeth Gregory argued that it made no sense to “cherry pick” individual shorts of Pennsylvania companies by Bridgewater, a firm that managed more than a hundred billion dollars – and that also simultaneously invested in companies from 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 PA companies, on behalf of its investors including pension plans for teachers, policemen, and firemen.”
McCormick wasn’t involved in choosing investments day-to-day as CEO, she added, arguing that linking him to individual shorts was “the equivalent of saying the general manager of a baseball team is responsible for every pitch.”
But as recently as last year, McCormick took full responsibility for Bridgewater’s investment decisions during his leadership.
“I was the CEO, so whatever we did, I’m responsible for,” he said at a 2023 event hosted by a conservative think tank.
McCormick joined Bridgewater in 2009, became its co-CEO in 2017 and its sole CEO in early 2020, before leaving the firm in early 2022.
One of the funds Bridgewater operated under McCormick’s leadership, known as Bridgewater Equity Fund, invested in or shorted stocks of more than 2,000 companies between 2017 and 2021. Bridgewater was required to disclose those positions in Labor Department filings for investment funds that handle money for retirement plans. CNN analyzed the filings, data from the Securities and Exchange Commission and other financial records to identify companies based in Pennsylvania that the fund shorted.
During McCormick’s years at the helm, the analysis found, Bridgewater Equity Fund reported shorting at least $16 million worth of Pennsylvania company stocks at the end of each year, with a maximum of $107 million reported in December 2018. The filings show just a snapshot of the fund’s holdings at the end of each year.
The fund shorted about four dozen companies from Pennsylvania during McCormick’s tenure, the records show. It shorted more than $25 million worth of Hershey stock as of the end of 2018; nearly $12 million in shares of Comcast, which is among the state’s largest employers, as of the end of 2019; and more than $16 million in shares of Penn National Gaming, which operates casinos and racetracks across the country, as of the end of 2021.
The fund did invest in stocks of some of the same Pennsylvania companies it shorted in other years, and overall, it reported spending more money buying stocks of Pennsylvania companies than shorting them in four of the five annual reports reviewed by CNN.
Bridgewater managed more than $100 billion in the years McCormick led the firm, so the reports showing the Pennsylvania short positions are a window into a fraction 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, preventing stocks from getting overvalued and making markets more efficient.
“A lot of people do think of short sellers as being predatory or betting on failure – but there is, I think, some social value to what they do,” said Andrew Jennings, a professor at Emory University School of Law. “In an ecosystem, there are predators… but they’re part of the system. They keep things in balance.”
But from a political perspective, explaining Bridgewater’s short positions of Pennsylvania company stocks could be difficult as McCormick tries 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 that company grow – they’re playing the market to make money for their investors,” Mallinson said. “That’s probably hard to explain to someone who isn’t super wealthy and is directly impacted by what happens with these companies.”
Eric Talley, a Columbia University professor who studies corporate law, agreed that the Bridgewater shorts could be politically problematic. McCormick had a financial responsibility to his clients to maximize the firm’s returns, he said. But when Talley lectures students about fiduciary duty, “their eyes start glazing over,” he said. “If I’m expecting to get their vote, I’m getting really nervous.”
One of the most politically sensitive companies that Bridgewater shorted under McCormick was US Steel, the storied manufacturing firm that operates four major plants near Pittsburgh. Bridgewater Equity Fund invested in the company’s stock between 2017 and 2020, records show, with the value of the investment reaching about $67 million as of December 2018.
But by the end of 2021, McCormick’s last full year as CEO, the fund had sold off its US Steel stock and shorted the company’s stock for more than $6 million. At the same time, it reported investing nearly $4 million in the stock of Nippon Steel, Japan’s largest steelmaker, which is now trying to purchase US Steel.
Bridgewater’s US Steel short was previously reported by The Keystone, a liberal Pennsylvania news website.
On the campaign trail, McCormick has blasted the proposed sale of US Steel to Nippon, calling it “a tragedy for our commonwealth and terrible for America’s security” in a post on X. Casey has also objected to the deal, which is currently going through regulatory reviews and may be blocked by the Biden administration.
Bridgewater’s bets against Pennsylvania companies are at odds with McCormick’s efforts to win the votes of their workers, argued Bernie Hall, the Pennsylvania director for United Steelworkers, the union that represents employees at US Steel and has endorsed Casey in the Senate race.
“To be someone who does something like that and have the gall to run for public office and seek votes from the people you were betting on to fail – that takes a lot of nerve,” Hall said.
Gregory, McCormick’s spokesperson, said that Bridgewater employees didn’t individually choose which stocks to take long or short positions in, instead making decisions about broader buckets of companies. She argued that the short positions Bridgewater took in Pennsylvania companies didn’t negatively impact employees because they represented a small fraction of each company’s overall value.
And she pointed out that while Casey served as Pennsylvania State Treasurer between 2005 and 2007, the state retirement plan held investments through Bridgewater. Casey was one of eleven members of the board that oversaw the retirement system.
The short positions are just one example of how McCormick’s past business dealings have generated negative headlines during his political career. Both in his first Senate bid in 2022 and during this campaign cycle, he has faced criticism over Bridgewater’s past investments in companies tied to the Chinese military that were later sanctioned by the US government.
Last year, McCormick told a Congressional committee that he “held deep reservations about Bridgewater’s exposure to the moral and patriotic hazards of doing business in China and often disagreed with key colleagues over China’s trajectory.”
Local media has also called into question McCormick’s claim that he helped create hundreds of jobs while in charge of a Pittsburgh-based software company in the early 2000s, and his leadership of that company has inspired TV ads on both sides of the race.
McCormick is one of several Republican Senate nominees this year – including Eric Hovde of Wisconsin, Tim Sheehy of Montana, and Bernie Moreno of Ohio – who have never held public office but are trying to convert their records as wealthy businessmen into political success.
The criticism dogging McCormick is emblematic of how candidates basing campaigns on their business backgrounds can be a double-edged sword, according to Mallinson, the Penn State professor.
“It can be both an advantage and a liability,” said Mallinson, who added that businesspeople make decisions without considering how they’ll one day explain those choices to voters. “Somebody who is in business is probably not thinking about political ramifications down the road.”
