Anthony Scaramucci, founder of hedge fund network SkyBridge Capital, joins Opto Sessions to discuss the future of money, the need for regulatory clarity and why he thinks Bitcoin will become an asset to store value rather than a universal currency, at least in his lifetime. He also dives into detail on his ill-fated business dealings with FTX founder Sam Bankman-Fried.
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Anthony Scaramucci may be best known for his 11-day stint as then-President Donald Trump’s bombastic communications director. However, prior to his foray in politics, Scaramucci was an established leader in the world of finance.
He began his career at Goldman Sachs’ real estate investment banking unit in 1989, the same year he graduated from Harvard Law School. In 1996 he started his first business, Oscar Capital Management, which he sold five years later to Neuberger Berman for an undisclosed sum.
In 2005 he founded the hedge fund network SkyBridge Capital, of which he remains managing partner. He also founded SALT, a New York-based thought leadership forum and networking platform, focused on the intersection of finance, technology and geopolitics, of which he is currently chairman.
On this week’s Opto Sessions, Scaramucci describes his career trajectory as being a product of the “American Dreamscape”.
From his youth growing up in a blue-collar community on Long Island, Scaramucci was driven by a desire to free himself from financial worries. By the age of 11 he had his first job, and he says his decision to enrol in law school was influenced by a Time magazine article that suggested he could earn double his father’s salary as an entry-level lawyer.
A Digital Economy Investor
According to SkyBridge’s most recent disclosure brochure, the firm had assets under management (AUM) of around $2bn as of March 2023. SkyBridge operates as a ‘fund of funds’, meaning that it provides hedge fund managers with exposure to a variety of assets through its investment products, which focus on themes such as the digital economy and cryptocurrencies.
The firm plans to launch a new ETF product focused on artificial intelligence (AI) in January 2024. “The grouping will be different versus the current AI ETFs that are out there,” Scaramucci says, explaining that ETFs are often over-focused on Microsoft and cloud-computing, while SkyBridge’s fund, by contrast, will concentrate on stocks with direct exposure to the industry — stocks which are “publicly traded and [that] you can access right now in the AI space.”
While some have questioned whether current investor excitement around AI is fuelling a bubble, Scaramucci predicts that valuations will likely settle and “clear winners” are already emerging. He cites Nvidia [NVDA] as an example. “It may be up, it may be down, it could get cut by 50% once the bubble bursts,” he says. “But I am willing to bet you that if you hold that stock for 15 years, if you are brave enough, you will be very well served ”
Cryptocurrencies have been another major investment focus for SkyBridge and the Mooch for the past three years.
In April 2022 Bloomberg reported that “almost half” of SkyBridge’s $3.5bn AUM was linked to cryptocurrencies, including Ethereum, Bitcoin and stocks in the crypto space. The hope was that such assets could help triple the firm’s overall assets, creating a $10bn fund.
Headwinds in the cryptocurrency space have created obstacles to this goal, however.
In November 2022 cryptocurrency exchange platform FTX collapsed after it was discovered that more than $1bn of investor funds had apparently gone missing. The firm’s founder, Sam Bankman-Fried, was a business partner of Scaramucci’s, and had acquired a $45m stake in SkyBridge in September of that year.
“He bamboozled a lot of smart people — including myself. I thought he was the Mark Zuckerberg of crypto, the revolutionary. It is very sad.”
“He bamboozled a lot of smart people — including myself,” Scaramucci tells Opto Sessions, opening up about how revelations about the crypto exchange founder’s alleged fraud “broke my heart”. “I thought he was the Mark Zuckerberg of crypto, the revolutionary. It is very sad.”
Still, Scaramucci believes that cryptocurrencies and the stocks of companies in the space remain an appealing investment. He predicts the market capitalisation of Bitcoin could rise from around $522bn as of 11 October to “easily be a $15trn asset”.
Indeed current economic headwinds could encourage more people to look to alternative systems such as cryptocurrency to build wealth.
In Scaramucci’s view, inflation — and not just the rapid rises we have seen in recent years, but the various cycles of high inflation that have occurred since World War II — has not only left people with less economic power, but has barred many from entering into parts of the economy where one might traditionally store and build wealth, such as property, the stock markets and gold.
In 2016 Scaramucci calculated how far his family’s income, when he was a child, would go all those decades later. It was “down 26% in terms of purchasing power”. “The people I grew up with felt economically aspirational”; now, he says, they are “economically desperational”.
In addition to AI and bitcoin, Scaramucci is looking to layer-two scaling on networks like Ethereum that will help tokenise the securities industry. “As you create more liquidity through tokenisation, you can take illiquid assets such as real estate and make those markets more efficient.”
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