Direct Investing SFOs: Why You Should Consider Them

Direct Investing SFOs: Why You Should Consider Them

Master Investors Sid Bass and Richard Rainwater and Direct Investing SFOs

Imagine taking a $50 million fortune and multiplying it 100-fold in 18 years, to $5 billion.

Sid Bass didn’t have to imagine. He watched his fortune do just that. And there were two secrets to his success:

First, he chose to empower his Single Family Office (SFO) to invest directly, rather than outsourcing portfolio management.

Second, he hired the genius investment manager Richard Rainwater to run the SFO’s investments—when Rainwater was an untried 26-year-old working at Goldman Sachs.

Although the Bass/Rainwater success story is well-known, many SFOs lack a true direct investment focus. Instead, they tend to allocate to outside managers and funds so they can concentrate their efforts on the family’s tax, legacy and lifestyle affairs.

But this may be a grave mistake. Like Sid Bass, families of significant wealth can become true investors: when they take the reins and actively use their capital to make deals, they can magnify their wealth. In the process, they create a new company, engage the family, and control their tax picture better—whether their wealth stems from the efforts of one individual, or several family members. In fact, taking this more hands-on, entrepreneurial, rigorous approach to investing may actually create a path to entrepreneurship for some next-generation family members.

Direct Investing SFOs Topics Covered

  • Sid Bass History
  • Richard Rainwater Involvement
  • Investment Strategies
  • Lessons


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