NEWNEW YORKYORK

The SkyBridge Story

An Interview with Anthony Scaramucci, Founder and Co-Managing Partner, SkyBridge Capital

EDITORS’ NOTE Anthony Scaramucci The U.S. needs corporate tax reform Why is defl ation the worst thing in the world? is the author of The Little Book of Hedge every 25 years. It’s hard to do that. Before It has to do with debt destruction. Funds: What You Need to Know About the 1986 tax reform, the last tax reform If I’m making $50,000 a year and I have Hedge Funds but the Managers Won’t was in 1952. Any good student of policy $350,000 in debt and we have deflation, my Tell You, and Goodbye Gordon Gekko: knows that you have to strip down the wages are going down to $25,000. My debt re- How to Find Your Fortune Without corporate tax code, even the personal in- mains constant. In an infl ationary environment, Losing Your Soul. Prior to founding come tax code, every 25 years. We’re you’re paying back the money with dollars that SkyBridge, Scaramucci co-founded in our 28th year without tax reform, so are worth less than the dollars you borrowed. Oscar Capital Management, which you have thousands of pages of regula- Infl ation is positive for the person doing the was sold to Neuberger Berman, LLC in tions built up. Then CEOs start focusing borrowing. In a defl ationary environment, the 2001. Upon Neuberger Berman’s sale to on avoiding taxes as much as they are person borrowing the money is crushed. Debt in 2003, he served as focused on making product. You see all destruction means he cannot pay the debt back, a managing director in its Investment Anthony Scaramucci these tax inversion mergers going on now. so that debt has to be marked on the balance Management Division. From 1989 So we need tax reformation and sheet of the lender. This is a world annihilation to 1996, Scaramucci was at & better guidance from the U.S. government. We for a modern economy. Co., where in 1993 he became a vice president in have been operating the government on a continu- How much can be done to prevent this Private Wealth Management. Scaramucci earned a ing resolution over the past six years. from happening? B.A. in from and a J.D. A President needs to submit a budget and The Fed is doing it. You can do a lot from a from . He is a board member of Congress needs to pass the budget. Then you will monetary policy perspective, but you can’t do it all Warrior Gateway, The Brain Tumor Foundation, have more long-term guidance and the economy because you need wage growth, which will stop and Business Executives for National Security, and will start to grow again. any type of defl ationary spiral. The U.S. hasn’t had is a member of the NYC Financial Services Advisory Internationally, many look at the prob- any wage growth in 10 years. Purchasing power is Committee. Scaramucci is the recipient of the Ernst lems that and Brazil have experienced. down; over the past six years, since the crisis, it is & Young Entrepreneur Of The Year® 2011 Are these natural growing pains or systemic down about 9 percent. Award in the Financial Services category. problems? If you get a combination of purchasing They’re not systemic as much as cyclical. But power being down and no wage growth, show me COMPANY BRIEF SkyBridge Capital (skybridge what we learned in 2008 is that when the U.S. where the infl ation is. People will tell me it’s in capital.com) is a global investment fi rm with ap- catches a cold, the rest of the world gets pneumonia. food and energy prices. But when you look at the proximately $10.9 billion in assets under manage- In 2007, the buzzword on was “de- total pie of goods and services, that is a slice and ment or advisement as of May 31, 2014. The fi rm coupling.” The world was so strong economically it’s an important slice, although it doesn’t show you offers investment services for commingled funds that it was going to decouple from the U.S. and the whole pie. of hedge fund products, customized separate ac- it didn’t matter what happened to the U.S. econ- Prices are down all over the place. You can’t count portfolios, and hedge fund advisory services. omy – the rest of the world would continue on its cure it through monetary policy, but the good news SkyBridge provides investment management prod- growth track. But that’s not true. is the Fed is aware of the problem and they’re on ucts, including long-only mutual funds, portfo- We also know the world is super tied into top of it. lio management, and advisory services addressing Federal Reserve monetary policy. So anytime the What moves allowed you to maintain the every type of market participant. Headquartered in fed jawboned a rise in rates, you saw the emerging fi rm’s success after the fi nancial crisis? New York, the fi rm also has a presence in Zürich, markets quake. The fi rst move was the decision to not take Switzerland. Until the U.S. starts growing again the way a defensive posture. We went forward in an ag- we think it can, you’re going to see this desultory gressive way. We started the SALT Conference in Is true recovery taking place and are there op- pattern in emerging markets. Las Vegas. The reason the conference business is portunities for growth in this market? Has true reform taken place since the cri- so successful is that people are getting off of their There is a general hesitancy by most alloca- sis in 2008? smartphones and interacting with others. We pre- tors of capital, so if you defi ne CEOs in the U.S. as There has been reform, but have we done dict these events will continue to grow throughout allocators of capital, they are hoarding cash now away with too big to fail? Most people in our indus- all industries. because of policy uncertainty, growth uncertainty, try would say that is not the case. Second, we contacted Citibank because we some geopolitical uncertainty, and the rise of China. I’m actually more worried about defl ation than learned they had to shed non-core assets and With these factors plus low interest rates, one infl ation. We fought an infl ationary-based war in the wanted to see if they had any assets that would fi t can raise a lot of money in the debt markets and ’60s, ’70s, and ’80s, and everybody is girded up for with our existing business. There were, so we bid put it on the balance sheet. infl ation. But I’m seeing an excess supply of goods on and bought those assets right after the crisis. These are all defensive postures that would and services, and pockets of defl ation in Europe and We’re at $11 billion today because we were make psychological sense given the fact that in other parts of the world if you think about their fac- successful at integrating that management team 2008, we had a crisis such that no one living had tory capacity. The reason the Fed hasn’t moved is with our management team and making it one ever witnessed before. they’re also worried about defl ation. fi r m• . 172 LEADERS POSTED WITH PERMISSION. COPYRIGHT © 2014 LEADERS MAGAZINE, INC. VOLUME 37, NUMBER 4