The sell-off in crypto, along with the broader market downturn, left Anthony Scaramucci’s flagship fund of funds SkyBridge Capital down 25% for the year to the end of July.
As markets began to rally, the multi-advisor hedge fund portfolio, called Series G, recouped some of those losses and was down 22% at the end of last week, Scaramucci said. Institutional investor in an interview. The effect of the market sell-off on the portfolio led to the repurchase of nearly half of the $2 billion fund’s assets, which Scaramucci said was the result of wire houses selling off the fund from funds “at the worst possible time”.
Scaramucci has been a strong supporter of crypto and has led SkyBridge into several new crypto offerings since late 2020. However, this strategy only accounted for 22% of SkyBridge’s registered Series G fund-of-funds at the end of June, according to a recent letter. to investors.
Skybridge’s second largest position was Dan Loeb’s Third Point, which fell 20% through July and accounted for 11.3% of SkyBridge’s portfolio at the end of June. The fund-of-funds had also invested in Melvin Capital, which closed this year after it failed to recover from GameStop’s short squeeze that saw it shed around 40% in 2021. Its other hedge fund investments included Point72 , Millennium and Coatue. .
The fund of funds’ largest crypto investment was NYDIG, a bitcoin trading platform which accounted for 10% of the fund, followed by BH Digital Asset, Brevan Howard’s dedicated crypto fund, at 8%.
The Skybridge fund-of-funds had no direct exposure to the big blowouts of Terra Luna, Celsius and Three Arrows Capital, according to a letter to investors, but “a contagion effect impacted all digital assets, including Bitcoin and Ethereum,” he says, “are often used as collateral in the digital asset ecosystem, and they have been affected by forced liquidations.”
“We anticipated a bear market, but the magnitude of the recent selloff has been more severe than expected given the maturing of the asset class,” Skybridge added. The price of Bitcoin and Ethereum has fallen over 50% this year.
Scaramucci and his partners are now seeking regulation to help recover crypto assets.
“Bipartisan legislation has been introduced in the US Senate to establish a clear regulatory framework for digital assets in general and Bitcoin in particular,” the letter states. “This legislation would enshrine digital assets in our system of financial regulation.” He also noted the fact that Bitcoin is now “squarely in the hands of the crypto-friendly CFTC.”
“Regulatory clarity will open the door to Bitcoin for the world’s largest financial firms,” he said. SkyBridge predicted that “banks and brokerage firms are increasingly faced with the choice of backing Bitcoin or watching the assets disappear.”
Earlier, the New York Times reported that SkyBridge’s flagship fund of funds is facing nearly $900 million in buybacks. Skybridge too suspended withdrawals of its smaller $230 million Legion Strategies fund, according to Bloomberg, which noted that nearly 20% of the fund’s investments are in private crypto offerings that are illiquid.
Scaramucci said II that the company still has an overall gain on its investments in Bitcon and Ethereum, which it started buying in November and December 2020.
“Even though these are down on the year, they are up from where we bought them,” he said. “Our average cost is between $18,000 and $19,000 on Bitcoin, around $900 on Ethereum.”
Bitcoin was trading below $22,000 on Monday, while SkyBridge’s investment in Ethereum fared better. It was worth more than $1,500 apiece Monday morning.