Monday, 30 May 2016
Last updated 2 days ago
May 8 2014 | 7:02am ET
SkyBridge Capital is perhaps best known for its annual hedge fund conference, SALT, which takes place next week in Las Vegas and is set to top 1,800 participants. But as the conference has grown both in size and stature, behind the scenes the New York-based fund of hedge funds firm has quietly gone from strength to strength.
SkyBridge now manages $7 billion in discretionary assets—all in funds of funds—and has approximately $3.5 billion in assets under advisement, a combined $10.5 billion.
“We’ve had explosive growth over the past few years,” said Anthony Scaramucci, founder and co-managing partner of the firm.
In fact, despite a perception that it is slouching towards obsolescence, the fund of hedge funds industry as a whole has been growing at a steady pace. It reached $663 billion in assets under management in 2013, the highest level since before the 2008 financial crisis, according to data provider Hedge Fund Research.
Much of SkyBridge's growth can be attributed to its June 2010 acquisition of Citi’s fund of funds business, which essentially quadrupled the firm’s size overnight, bringing its combined assets to $5.6 billion. Scaramucci attributes the firm’s steady—and unusually fast—growth since the acquisition to performance.
SkyBridge’s flagship multi-advisor hedge fund gained 14.25% last year and was up 21.29% in 2012. Those two solid years followed a slight loss of -0.63% in 2011.
The fund is up approximately 2.19% year-to-date through mid-April.
Thematic, Concentrated, Dynamic
Speaking to FINalternatives recently, Scaramucci summed up his firm’s approach to investing in three main steps.
“We are very good at picking the themes that are going to work in the current macroeconomic environment,” he explains, adding that once the members of his investment management team pick the themes, they then select the managers who they think will be successful within them. As of the end of January, seven of the top 10 funds in SkyBridge’s portfolio were event-driven, with the three others being relative value.
“Secondly, we are concentrated. Our top 10 managers represent 60% of our assets,” he says.
Almost 13% of SkyBridge’s assets were in the Paulson Recovery Fund at the end of January. Another 8% are in Third Point Ultra, and Metacapital Mortgage Opportunities and Trian Partners each manage just over 7%.
“The third piece is that we have been fairly dynamic. Last year was a big year because we migrated out of our mortgage exposure. We reduced it from 40% to around 20%. At the same time, we increased our exposure to event driven.”
As the firm’s assets have grown, so has its staff. SkyBridge now employs 60 people—55 in New York and five in Zürich, Switzerland. The firm hopes to expand to London within the next few years, but it is proceeding cautiously due to “regulations and tax reasons,” Scaramucci says.
The JOBS Failure To Act
Whether he likes it or not (and he doesn’t seem to mind), Scaramucci has become an unofficial spokesperson for the hedge fund industry. While most fund managers shun the media all together, or are at least wary of the press, the Harvard Law School alum has embraced the limelight. In addition to speaking at his own conferences and many other industry events, he regularly appears on CNBC‘s Closing Bell and Fast Money.
“We are in a totally different world today. I think it is impossible to have a strategy where your head is in the sand. You are better off explaining what your story is, trying to create some personal connectivity with people and offering transparency,” he says.
As for the JOBS Act—which many predicted would lead to hedge funds advertising in trade publications and perhaps even on television—Scaramucci hasn’t yet seen the impact on the ground.
“We are living in a very aggressive regulatory and prosecutorial environment,” he says. “I don’t think people want to start advertising because they are afraid they won’t get the regulations right. You don’t see me advertising. I think it is better to wait.”
See You At SALT, Singapore
Earlier this year, it was reported that the annual SALT Asia Conference, the little sister to the firm’s Las Vegas event, was not attracting many participants and may soon be canceled. Scaramucci rubbishes the suggestion.
“The hedge fund industry is much smaller in Asia than it is in North America, and they do not have a conference culture in that region of the world. When you have 1,000 people show up at your hedge fund conference in Singapore, it is the most successful hedge fund event in Asia,” he says, adding that SALT Asia will go on as scheduled.
“We will be in Singapore again in October of 2014. We may go to Tokyo one year, maybe up to Hong Kong. We may mix up the venue, but the SkyBridge Asia Conference will continue,” says Scaramucci definitively.
In fact, the Asia conference has been particularly good for his firm.
“We wanted to get institutional investors to meet Asian managers, and we also wanted to get Asian investors comfortable with hedge funds,” he says. “The strategy has worked wonderfully for us. We have a strategic joint venture with Woori Investment & Securities now. We got several large Japanese pension funds to allocate capital to us. We won a mandate for $50 million from the Korea Post. I think the conference has been resoundingly successful."
Hunt, Fish And Write
The perennially energetic Long Island native is always juggling multiple balls. Besides running SkyBridge, Scaramucci and partners are opening a restaurant in Midtown Manhattan next month.
"The place looks fabulous,” he says of the soon-to-be steak and seafood joint, aptly dubbed the Hunt & Fish Club.
Scaramucci is also penning his third book, which will concentrate on leadership and lessons he learned when SkyBridge—like many financial firms—almost collapsed during the 2008 financial crisis.
As for Scaramucci’s flirtation with politics—always, he insists, in a supporting role and not as a candidate—expect to see him rallying support for his pick in the next presidential election. And just like the rest of us, he has no idea who that may be.
“I will be very involved, and it is super important to have some level of involvement. At the end of the day so many of the economic policies and so many of the regulations on a macro basis—not only for our business but for the whole economy—depend on government.”