Former Donald Trump adviser Anthony Scaramucci, who spent a brief but memorable 11 days working in the Trump White House as a communications director before being unceremoniously booted, is now under the gun as investors fear for the future of his hedge fund.
According to a report from Bloomberg, SkyBridge Capital is tied to the failed crypto company FTX. That link has investors on edge and ready to bail.
As Bloomberg's Katherine Burton and Francesca Maglione wrote, "Scaramucci may be in a corner from which even a cockroach couldn’t escape. The reputational hit from his alliance with [FTX's Sam] Bankman-Fried, who denies any criminal wrongdoing, was just the latest problem for SkyBridge after a big bet on crypto that began three years ago. Clients are rebelling, assets are dwindling, and most employees are gone."
So far, Scaramucci has been able to stave off his hedge fund's collapse by limiting how much investors can withdraw, but one investment analyst said his stalling tactics are alarming.
"Managers have a responsibility to protect investors from losses when markets seize up, but managers also have a responsibility to provide liquidity to investors who request it. If enough people want to leave, you should shut the fund and return the assets as they are sold off.” Michael Rosen, chief investment officer at Angeles Investments, explained.
As Bloomberg reports, Scaramucci has been trying to stop the bleeding which appears to be getting worse.
"SkyBridge has all but barred investors from redeeming their money, even though two-thirds of its underlying investments could be sold to make payments. In 2020 it cut redemptions to twice a year—March 31 and Sept. 30—from quarterly. For the September 2022 redemption period, investors representing 60% of assets asked for their money back; they got 10%," the report states. "For the withdrawal period ended this March 31, SkyBridge said it will return 7.5%. In its most recent filing, it stated only that demand exceeded that amount. Morgan Stanley, whose clients account for about $800 million of the $1.1 billion flagship fund, is trying to get them out of it, according to people familiar with the efforts."
Trying to quell the investor uprising, Scaramucci told Bloomberg, "We had a very bad year. I’ve acknowledged that. But what I’m not going to do is something against the interests of my clients. I’m operating inside of the ambit of the prospectus on behalf of my clients. We’ll see where things shake out over the next 6 to 12 months.”
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