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HEDGE FUNDS ITALIAN STYLE

Anthony Scaramucci is a successful American financier, entrepreneur and author. He is the Founder and Managing Partner of SkyBridge Capital, which is a global alternative investment and advisory firm.

You were born in Port Washington, Long Island (New York). Before we talk about hedge funds, tell us about your family.

Port Washington was sort of a transplanted city from Volturara Irpina, a small Italian town of maybe 4,000 people. It is a classic Italian immigrant story: in 1910 and 1920 groups of people from Volturara emigrated to the United States. They passed through Brooklyn, ended up in Port Washington and had such a good experience they called their town folks back in Italy to join them.

This is a country that was founded on very hard work and a lot of sacrifice. It was not a country that expected entitlements. It did not expect free benefits. It was a group of people that understood that they needed to work, and if they worked they could have a better life. They wanted their kids to have opportunity, education and to aspire to be part of the American dream.

Both of my parents were born here. My father worked with his hands and he never went to college. My mother was a homemaker. My father worked for the same construction company for 42 years, and he was very strict with us when we were kids. The result is that my older brother is an electrical engineer. I went to Tufts University to study economics and then to Harvard Law School. I am the first person in my family to enter a professional school like a law school or an Ivy League college, and my parents helped me any way they could.

My parents did not have a lot of money. I had to take out students loans, and I had to work hard, but I will never over glorify my upbringing. It was a great middle class upbringing. We lived in a single family home and I shared a room with my brother. We used to kill each other in that room. Now, we are very close. After the recent blackout caused by Hurricane Sandy, he came to live with me for eight days and I realized why I had to get rid of him! We are very close to our sister as well. My parents, thankfully, are still alive.

You graduated summa cum laude from Tufts University in Medford, Massachusetts: why did you choose economics?

I studied economics because I always wanted to have some kind of business background. Then I went to Law School because I wanted to have some level of legal training. I originally thought I would be practicing law for quite some time. But when I got to law school, I discovered that I had a much greater proclivity for business.  So I began the process of trying to find a job. I submitted my resume and ended up landing a job at Goldman Sachs in the Real Estate Department, coming out of law school. But this process was obviously not without some bumps along the way.

I wrote in my book Goodbye Gordon Gekko: How To Find Your Fortune Without Losing Your Soul that your perceptions as a kid get altered as you get older. As an example, when I went to my first job interview, I wore a 100% polyester suit, a 100% polyester shirt, a black skinny tie and cockroach-killer shoes. I thought I looked fantastic! I was dressed for first impression success. One of the partners at Goldman Sachs pulled me out of the interview and told me: “Listen, you are a smart kid but you are one of the worst dressed people at Harvard Law School. I can’t invite you down to Goldman Sachs dressed like this.”

When I started working at Goldman, I had never seen the inside of a commercial office building before. I had never been to a country club or hit a golf or tennis ball for that matter. If I did, it was in Phys Ed, in seventh grade.

There is a lot of Mets memorabilia in your office: why do so many Italian-Americans love the Mets?

We grew up in that area. Port Washington is on the Long Island Railroad line that goes directly to Shea Stadium (now Citi Field). You hop on that train and you go right to the stadium. If you meet the Italian community from Northern New Jersey or the Bronx that are closer to Yankee Stadium, they like the Yankees. If you grew up in Long Island or Brooklyn you were closer to Shea Stadium and you ended up liking the Mets

I used to have a paper route. We treat kids very differently today. But back then when I was eleven years old, I had a bicycle with baskets on it and delivered the paper after school every day. During the summer, on Wednesdays, when it was time to collect, I took the train by myself or with one of my buddies to go to Shea Stadium. We bought general admission tickets and would sneak our way down to the box because the team was terrible and nobody was there. I remember that the ushers would always turn their heads and let me go. I would sit in the front row and it was during those days that I fell in love with the team. Now I own a small piece of the Mets, and am very proud of it. I love baseball for so many different reasons.

You started working when you were really young; tell us about your work ethics.

My uncle had a motorcycle shop at the top of the hill where I lived. I went there to work sometimes and I sold helmets, chains and mopeds. It did not feel like work, because I was doing something that I liked. That is a key element of success. 

If you have the right job, you really don’t work a day in your life. For me, I was built to run a business and to create something. My dream in life was to start something from nothing. This business is my second: I started the first one (Oscar Capital) with a partner in 1996. We sold that business to Neuberger Berman in 2001. I stayed until 2005 and then left to build SkyBridge Capital.

SkyBridge started with nothing. We had three employees and no assets under management in 2005. Now, eight years later as we are about to enter 2013, we have $6.7 billion in total assets under advisement or management (as of September 30, 2012).  I am very proud of the people here. You need the right culture. You can’t be a “me” or an “I” person, you have to be a “we” person. You have to hire the right people and stick together through ups and downs and during difficult periods of time.

We want the best people. If someone is good at what they do, we want them on our team. I am committed to the employees. If you want to be a good leader, you are in a service position. You work for the other people, they don’t work for you. How do you juggle all of this? You delegate a lot. There are many smart people around me and I let them do what they do.

You are creating a new concept. You want to make hedge-fund investing approachable to the average investor. Critics in your field argue that it is too risky.

I am not a populist but I am a popularizer. I believe that the mass affluent, and people who traditionally have had no access to hedge funds deserve the opportunity. I don’t believe the media spin or the negative vibes of the hedge fund community. SkyBridge does a great job. I want to be a forceful advocate and change agent for what is positive about our industry, and I don’t mind taking some hits along the way. I am not searching for a favorable opinion; I want to share my opinion. You can either like or dislike what I am saying, but I hope you respect me for the authenticity of who I am as a person.

We organize the SALT (SkyBridge Alternatives) Conference every year in Las Vegas where we try to raise awareness not only about what we do, but for the alternatives industry as a whole. This year we hosted Vice President Al Gore as well as Secretary of Defense Dr. Robert M. Gates and Governor Sarah Palin. Past speakers have included President Bill Clinton, President George W. Bush, Colin Powell and Governor Romney. We have had politicians, historians, philanthropic trailblazers, economists and the best and brightest from the financial world attend and speak. In 2012, we hosted our inaugural SALT Asia event in Singapore to expand into a growing Asian marketplace. 2013 will mark our fifth year of hosting SALT Las Vegas. We continue to try to raise awareness of the alternative investment community so people will begin thinking differently about our industry.

The theme last year of one of our evening SALT celebrations was Feast of San Gennaro. I had a meatball bar there. I am Italian. I love my heritage, my upbringing and the culture that I came from. I make no apologies for being me.

We don’t have a perfect story here. The person who has a perfect story is the person who is lying to you. I am going to tell you a story that is uneven and far from perfect. But we are passionate people. We work very hard and are committed to the long term health and happiness of SkyBridge.

Where do you see yourself five years from now?

I want SkyBridge to be a global brand; an internationally recognized name in the alternative investment industry. We continue to explore new products and are focused on strategic growth year over year. When the SEC will allow us, we will start advertising.

I often speak on television to promote the SkyBridge brand and be a voice for the industry. I am writing books for the same reason. I want people to know who we are. I want to have the opportunity to tell them our story, and to have them invest their money with us.

Five years from now I hope we are closer to that goal.

You deal with foreign currency: what do you think of the Euro’s future?

My prediction? The European Union is going to stay together. It is unclear to me whether Greece is going to stay in the EU. But the other nations are going to work to keep the coalition together because it is necessary. I believe that there will be people in the investment community that will be surprised by the political will to keep the coalition together.

Politicians have the ability to do all the wrong things until the last minute. It’s like what Churchill said about our country, he said “The Americans will always do the right thing… after they've exhausted all the alternatives.”

Your prediction about Italy’s financial future?

I can’t say that I know about the commerce of Italy as well as I know about my family and their roots there. When I go to Italy, I go to visit my family. I am not the typical American tourist as much as I am a family man wanting to visit other family members.

I am in love with Italy. I am proud of my Italian descent and believe that in the long-term the Italian people are very resilient. They will have a much stronger economy and a more vibrant country. My prediction is that five years from now the economic situation inside Italy will be better than it is today.

Anthony Scaramucci is the author of Goodbye Gordon Gekko: How To Find Your Fortune Without Losing Your Soul (Wiley, 2010), The Little Book of Hedge Funds (Wiley, 2012) and a regular CNBC contributor.

December 8, 2012