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Alternative Market Briefing

De Francisci: mediocrity is highly respected in hedge fund industry, Part 1

Monday, August 04, 2014

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Giovanni de Francisci
Benedicte Gravrand, Opalesque Geneva:

Giovanni de Francisci runs the Petschek Family Office out of Monaco. He described his unconventional views on manager selection, the state of the hedge fund industry and investment risks using various colorful similes during a recent Opalesque TV interview with Matthias Knab. Here are some of his views.

The key to successful investing is not a steady return 12 years ago, he was dissatisfied with the single digit returns the family office was getting, even though the family, being conservative investors, did not mind. He then told them that Warren Buffett was not considered a risky investor and yet gained 12%-13%; "maybe we should be investing with him." That was when his foray into hedge fund investing started.

"A Formula 1 race car driver is not considered a dangerous driver because he drives fast, he is considered a great driver because he can drive so fast that at the same time he is not crashing," he explains.

"That is why he is able to get around the Formula 1 course and win, by going fast and not crashing. That’s the key to a very successful hedge fund manager. Today, conventional wisdom has dominated our industry, such that hedge fund managers, if they are Formula 1 racecar drivers, would be moderating their speed because investors would be saying, "the higher the return the higher the speed" demonstrates ......................

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