Giovanni de Francisci: What Some Family Offices Are After When Investing With Hedge Funds by opalesque.tv
This video is a real bummer and a rare document on the preferences and investment philosophy that drives certain private family offices who typically tend to stay off the record.
Giovanni de Francisci: What Some Family Offices Are After When Investing With Hedge Funds
Carlson Capital's Black Diamond Arbitrage fund is up 5.77% for the first eight months of the year, including a 1.72% return for August. Last year, the fund returned 2.39% for the whole year. Q3 2021 hedge fund letters, conferences and more The fund consists of merger arbitrage mainly consisting of signed or "rate of return" Read More
Giovanni de Francisci is the portfolio manager of the Petschek Family office in Monaco, and in many ways an unconventional hedge fund investor.
For Giovanni de Francisci, the biggest risk is not generating sufficient returns, therefore his main interest is to achieve outsized or even “phenomenal” returns. However, he also admits that the opportunistic investments he is looking for are often idiosyncratic and very limited in size. He argues – citing a number of trade examples like a low risk South Florida real estate strategy making 300% per year – that high returns don’t necessarily come with high risk, and that a “safe” investment can in fact carry the greater risk of ruin.
One of his main criticisms regarding the state of the hedge fund industry is that those outsized returns he is looking for are harder to find today as hedge fund managers have started to “dumb down” their returns and strategies in order to please the majority of investors. Like the hedge fund manager he just met at a conference who told him that he sees himself forced to take the extra effort to dilute (or “diversify”) his investment strategy so that the returns correspond to the institutions’ palate, while at the same time his own money in the fund that sits in a separate and more concentrated class had never yielded less than 30% in any rolling 12 months period. De Francisci points to a number of risks in the “conservative” investment approach, and laments that today “excellence is contemptuous, and mediocrity has become highly respectable”.
Giovanni de Francisci has also seeded managers. He goes on speaking about his selection criteria and his unconventional due diligence that include home stays with hedge fund managers and what you can learn by playing backgammon with them. He also shares his views on risk monitoring and why he believes the prevalent fear of fraud in the hedge fund industry is unconstructive and overblown.