Anthony Scaramucci, founder of SkyBridge
Capital, hosts a popular wine-and-schmoozing event during the World
Economic Forum.
DAVOS, Switzerland – The official
themes of the World Economic Forum this year may include innovation and
sustainability.
But for
Anthony Scaramucci of SkyBridge Capital, there is a narrower but still
important current running below the surface: What are companies around the
world going to do with their cash?
It may be less
grand than promoting social exclusiveness, but the point underlines a
fundamental truth about Davos. The enclave in this alpine city revolves
strongly around business, as chief executives and financiers swan around to
network. (Mr. Scaramucci, a flamboyant salesman whose nickname is “the
Mooch,” himself hosts a popular wine-and-schmoozing event during the forum.)
For Mr.
Scaramucci, a money manager whose firm has about $6.3 billion invested in
hedge funds, there is perhaps no more prominent trend than investors trying
to get companies to shrink their bulging cash reserves.
That has been
a focal point of the latest wave of shareholder activism, where hedge funds
have pushed companies to make better use of their cash – like, say,
returning it to investors in the form of dividends or stock buybacks. A
growing number of companies, including titans like Apple, have faced
pressure, leaving many to gird themselves against possible attacks.
The rise of
activists, including World Economic Forum attendees like Third Point’s
Daniel S. Loeb and Elliott Management’s Paul Singer, was made possible by
the conservatism of companies after the financial crisis. Unnerved by the
violent market gyrations of late 2008, corporate chiefs have built up their
reserves. Now the heat is on to put that money to work,
whether through mergers or distributing
it to shareholders.
Mr.
Scaramucci’s firm has bet a growing percentage of its assets on so-called
event-driven hedge funds. He added that he was eager to keep plunging into
the strategy, slowly shifting away from a wager on the resurgence of
mortgages. The latter has been good for SkyBridge, which reported a return
of 21.5 percent in 2012 and 14.25 percent last year.
The strategy
still has around two years to play out, he added. But there is still a lot
of room, with more than $2.8 trillion on the balance sheets of companies in
the Standard & Poor’s 500-stock index.
“If Dan
reopens his fund, I will be standing there with a very big check,” Mr.
Scaramucci grinned.
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