Anthony Scaramucci’s sleazy sales pitch

By Felix Salmon
September 9, 2011
Edward Robinson has a fabulous profile of Anthony Scaramucci today. Scaramucci is a master of self-promotion; in the secretive world of hedge funds, he stands out as the guy who will spend whatever it takes to get noticed.

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Edward Robinson has a fabulous profile of Anthony Scaramucci today. Scaramucci is a master of self-promotion; in the secretive world of hedge funds, he stands out as the guy who will spend whatever it takes to get noticed.

Scaramucci uses his SALT conference — and its A-list lineup of speakers — to burnish the SkyBridge brand. At the 2011 event, Scaramucci threw a private dinner for Bush, who pocketed $175,000 for his off-the-record talk earlier in the evening…

Scaramucci promotes SkyBridge in the media too. He makes regular appearances as a stock picker on CNBC, and spent more than $100,000 to place the SkyBridge logo in a scene in Stone’s second Wall Street drama featuring Gordon Gekko, the insider- trading felon played by Michael Douglas…

When the recession struck in 2008, SkyBridge rapidly lost a fifth of its value and Scaramucci criss-crossed the country trying to persuade clients not to withdraw from his fund…

At the time, financial firms were canceling conferences in Las Vegas out of concern it would look bad to party in Sin City as taxpayers bailed out Wall Street.

Scaramucci had no such qualms. He decided to host his first hedge-fund extravaganza at Encore at Wynn, one of the priciest hotels on the Strip. “I wanted to let people know we were still alive,” he says.

What Robinson nails is the way that this is what Scaramucci does — it’s his job. Scaramucci is a fund-of-funds manager, posting returns even he admits are lackluster: he more or less tracks the S&P 500, while making big, risky bets (a third of his assets are in MBS), investing in leveraged hedge funds, and reserving the right not to redeem his clients’ money upon request. Which means that he only has two ways to make money: either find stupid people to give him their money, or else shower himself with so many conspicuous indicia of success that people just want to buy into his perceived success.

OK, make that one way to make money.

It’s far from clear that Scaramucci actually is successful, in financial terms, by Wall Street standards. He certainly spends a lot — millions of dollars — on various forms of conspicuous consumption and self-promotion. But he’s not making a lot: since he’s a fund-of-funds manager, he’s making 1.5-and-zero, rather than 2-and-20. And under the terms of his deal with Citigroup, a substantial chunk of that 1.5 goes straight to them. He has to run Skybridge, of course, with all the employee compensation, compliance costs, and the like that entails. He’s regularly writing seven-figure checks to pay for things like the Davos Tasting of ludicrously expensive wine. And of course he has to pony up charitable donations, too, so as to be able to get up in front of a well-heeled crowd to receive the Hedge Funds Care Award for Caring. (I’m not making this up.)

Scaramucci’s fake-it-till-you-make-it approach might end up working: his fund is still growing, and Robinson says that he “has become the Wall Street player he aspired to be when he first landed at Goldman some 22 years ago.” He’s living proof of what Windward Capital’s Robert Nichols is quoted saying at the end of the article: “Performance isn’t what beats a path to your door. It’s sales and marketing.”

But he’s not a stock-picker, or even, really, a hedge-fund manager: he just plays one on TV.

And he’s also dangerous:

SkyBridge, which manages $2.8 billion in assets, is aiming its funds of funds at so-called mass affluent investors. They are households with a net worth of $100,000 to $1 million not counting their primary residence…

“I want to be the Peter Lynch of the hedge-fund industry,” Scaramucci says, referring to the Fidelity Investments money manager and TV spokesman who helped popularize mutual-fund investing in the 1980s and 1990s. “I want to make hedge-fund investing approachable to the average American investor.”…

The fund of funds has a minimum threshold investment of only $25,000, and SkyBridge sells it through Morgan Stanley Smith Barney, Bank of America Corp.’s Merrill Lynch unit and other retail brokerages.

This is a really, really bad idea. Households with less than $1 million in net worth should not be investing in hedge funds; they should certainly not be paying Scaramucci 1.5% a year for the privilege of doing so. (Plus front-end “placement fees” of as much as 3%.) The problem here is that most hedge funds are not good investments, and there’s absolutely no indication whatsoever that the funds Scaramucci invests in are any exception. Would you invest your money with the kind of person who pays real money to sponsor a fictional ball in the movie Wall Street 2?

Some people would: Scaramucci does seem to be a consummate salesman.

A youthful man with wavy brown hair and matinee idol looks, Scaramucci does have a salesman’s smooth touch. He peppers his conversation with offers to perform favors — “What do you need?” — and is fond of slipping his arm around your shoulder and giving it a squeeze to make a point…

“I would make him the trustee for my estate not because he’s a brilliant investor but because he would do the right thing for my family,” says Robert Matza, a former president of Neuberger Berman and now president of GoldenTree Asset Management LP, a New York hedge fund. “I trust him.”

I’ve seen another side to Scaramucci: my post about his wine tasting was followed by a series of irate phone calls and emails from him, not only to me but also to any and every senior Thomson Reuters executive he could think of. It’s the steely competitor underneath the glad-handing exterior. “Always invest with an Italian,” he says. It’s a joke — but it can also be read as a threat. If anybody is going to become the Peter Lynch of the hedge-fund industry, let’s hope it isn’t this popinjay. He’s the very worst of Wall Street, made flesh.

Update: I was happy to strike through the gratuitous Italian reference when Scaramucci told me he had taken offence.

21 comments

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I’ve just spent the morning having some pretty extensive dental surgery and need to thank you for cheering me up no end, Salmon.

Posted by ottorock | Report as abusive

Thanks. You’ve done readers a favor.

Posted by Chris08 | Report as abusive

I think the real red flag is would you give any money to a man that thinks off the cuff remarks from George Bush is worth anything?
That is a man with truly bad judgement.

Posted by ericinaustin | Report as abusive

I take little exception with the distaste you have for self-promotion.

I do think though, that out-stripping the S&P total return by 2% per annum with less the vol has a bit to do with the firm’s success. There are plenty of institutional allocators that would love that allocation.

Easy to write about a big bad finance guy throwing money around in the midst of such times, however. I understand. Take exception with the man though, the fund is better than average in the space, no matter what you think of the average, he’s doing better by his investors than many that I’m sure have more likeable personalities.

Posted by BRM_3 | Report as abusive

And there is the popinjay you promised. Thank you; I was waiting for it.

Posted by Curmudgeon | Report as abusive

Anthony is worth 100,000,000 dollars and he has not hit 50 years of age. He grew up with no money and put himself through Harvard. I suggest Felix Salmon to quit his day job of writing poorly edited articles and get a real career on Wall Street. Felix, jealousy will get you no where in life. As for Anthony, I personally have never met the man, but continue doing your strategy, because it is certainly working.

Posted by Anonymous | Report as abusive

Felix – your comments are so poorly done- who cares how Anthony Scaramucci advertises?
This coming from the person who wrote an article telling people not to donate to Japan because they are rich and didn’t need outside help after the tsunami?
The US is rich too so I suppose people shouldn’t have support us after 9/11 or Katrina?
Can’t you ever find something worth writing about.
Scaramucci seems like a good guy and donates to charities WHO THE HECK CARES HOW HE ADVERTISES?
Find something of meaning to write about!

Posted by talbano | Report as abusive

@Anonymous, if I may call you that… “real career on Wall Street” you say? Because the world can’t function without money movers? I would think there are enough youth willing to look the other way and willing to be burned out to make their fortune playing with other people’s money to need Felix.

@talbano, the important part is he wants to make the crack available for everyone, not just the big investors. That spells trouble, especially in these economic times. Most people “seems like a good guy”, but this one wants to take your money… and have you trust him to invest well. Is that your normal criteria for investing?

Posted by hsvkitty | Report as abusive

@Anonymous, I read the whole story and this is what it said..

‘As a teenager, Scaramucci spent afternoons helping out at his uncle Sal’s Harley-Davidson shop. He wasn’t allowed to ride motorcycles.

“My father said, ‘We’re going to put $100,000 of education into your brain, so I don’t want it on the pavement,” says Scaramucci…’

Sounds as though he had to work to pay for some of his education and his own living expenses, but not all. That isn’t exactly a family with “no money” if they can afford to help him out that much.

Be careful in whom you trust and place on a pedestal, because you will likely be the person they choose to soften their landing as they fall.

Posted by hsvkitty | Report as abusive

Felix,
Dig deep on this one. The scandal is there in spades.Don’t stop with the first 3, it gets real big. Didn’t Scaramucci have an office in the same building as Madoff? What about the Mets? Much much more….

Posted by NYCinvestor | Report as abusive

A can smell your envy from here. Five-Day old fish better.
When was hustling for clients been actionable or in poor taste? Besides who cares how Anthony Scaramucci advertises? Who cares if he blows GBW and pays for the exposure. This is how a young buck is suppose to act and I prefer it to having one sitting in his office banging this assistant. Anthony is a fine and honorable manager.. How are you doing and what kind of returns are you giving anyone but your goldfish?

Sorry to intrude from nowhere but this thread was sounding like a bunch of losers compiling about a guy that is hustling, moving, and shaking while they are sitting alone polishing their knobs. Shame on you.

-Rampworm

Posted by Rampworm | Report as abusive

Scaramucci is nothing like the people write here. I met this guy and not only did he make the job I had at the time better ( his sense of humor is the best), but he tipped me 20 dollars for no reason at all. I had no idea WHO he was, he never even mentioned it to me. I turn on the tv and see him debating with obama, and find out he’s worth 80 Million dollars and put himself through Harvard. He’s a great guy, and the definition of SUCCESS. I smell jealousy all over this article. Anthony Scaramucci is a winner. That is an unavoidable obvious FACT. Felix writes a column that smears and criticizes people. You choose who you listen to, I go with Scaramucci. Who’s position in life would any of us rather be in? When I hear a critic, I look at the details, and then eventually I look at THE MEN involved. The critic, and the subject of his critcism. Nothing but jealousy here. As if self-promotion is this evil unethical thing people do to gain, and retain clients. So what Felix? Even if he does, Just what is your point? I’ve actually met this guy and nothing you write here will change my opinion on him. I know a good person when I see one. Scaramucci is great person.

Posted by Entrepreneur04 | Report as abusive

Anthony Scaramucci has character which is a rare commodity nowadays. I do not know Anthony personally, yet I do know he is a man of principal with his priorities in tact. Anthony appeared at the funeral of my best friend 2 years ago. There were no connections to be made from being there and he only knew Pedro through occasional encounters. He wasn’t self serving or loud that day. Yet he was there when it counted. I’ll always respect and see him differently because of it. Just my two cents.

Posted by jchrisphonte | Report as abusive

This is the worst kind of journalism, more suited to a trash magazine than Reuters. Shame on Reuters. Say what you want about Scaramucci’s hedge fund, but to levy unfounded, school yard attacks is juvenile, unprofessional and disgraceful. Further, Solomon’s Italian reference is outrageous, a vicious stereotype, and if directed towards any other nationality, would have been grounds for a prompt termination. Solomon’s cross out rather than removal of his comment only confirms his extreme arrogance and bigotry. I knew Anthony in passing thirty plus years ago in high school. I have followed his career and read his book. Anthony has not changed at all. Anthony was and still is a genuine, self-made guy, the kind of guy who would give you the shirt off his back.

Posted by celosur | Report as abusive

@celosur, I couldn’t agree more!

Posted by savvycents | Report as abusive

Felix, I love your cross-out in your column of your comment:

“Always invest with an Italian,” he says. It’s a joke — but it can also be read as a threat.

What a passive-aggressive “non-apology” to cross it out. It just highlights and perpetuates your slurring twist of Anthony’s attempt at self-deprecating humor. Who is the classless one here? But it is clear from the tone of your diatribes,that we should expect anything truly high-brow from you, despite your elitist pretenses.

Posted by savvycents | Report as abusive

Felix, I love your cross-out in your column of your comment:

“Always invest with an Italian,” he says. It’s a joke — but it can also be read as a threat.

What a passive-aggressive “non-apology” to cross it out. It just highlights and perpetuates your slurring twist of Anthony’s attempt at self-deprecating humor. Who is the classless one here? But it is clear from the tone of your diatribes,that we should expect anything truly high-brow from you, despite your elitist pretenses.

Posted by savvycents | Report as abusive

Felix, soooo green with envy.. As well you should be- he is self made, good looking, very generous to numerous charities, great personality…you know, everything you’re not.

Posted by soccermom7026 | Report as abusive

Good looking? Self-made? Generous? Divorced and does not see his children.

Posted by Knowitall123 | Report as abusive

I am a democrat and don’t agree many times with A Scarramucci ideologies,, but I find him to be an outstanding person with good economic sense and a pallet for investing. I think you’re being too harsh on him. Why go on such an attack like that? You sound like your a sleazy reporter who works for the National Enquirer. In the gay world we would refer to you as a hot trannie mess. It’s disgusting how the media loves to just spin and spin and spin. Thank goodness that there are some of us out there that don’t buy into your bs yellow journalism.

Posted by globalmess65 | Report as abusive