The five-year-old long-only investor has generated net annual returns of nearly 60% with backing from LPs including Patrick O'Shaughnessy.

Generations of accumulated wealth have a way of shaping the people who inherit their echoes. Andy Pérez-Benzo was born in the US while his father was pursuing a PhD at MIT but would travel back to Venezuela to visit family and encounter what he calls "vestiges of great material wealth": the remnants of a construction dynasty that, three and four generations back, had helped developed Caracas's subway, highways, bridges, and hydroelectric dams. A series of bad real estate investments in Texas in the 1990s had unraveled most of it before he was born.

"That was honestly, even as a kid, just very inspiring, very motivating," he tells OWL. "I was interested in the idea, as vague as it was, of going into business."

It was his grandfather, the former chief economist of PDVSA, Venezuela's state oil company, who helped him figure out how to find his path in the business world. His advice - experiment across a few areas for several years each, do it patiently, and the right path will become clear.  

"It's easier to figure out what you don't want to do, harder to figure out what you do want to do," Pérez-Benzo recalls him saying. “Being a lawyer or a doctor wasn’t for me. For business, I narrowed it down to pure finance, operating companies, and consulting.”

At Princeton, where he studied European history, Pérez-Benzo co-founded the school's investment club, where he and his classmates read through Warren Buffett's letters together.

"That's where the intellectual genesis of my interest in investing came from," he tells OWL.

Pérez-Benzo's first stop after graduation was Goldman Sachs's sales and trading desk, which he found largely mechanistic but occasionally illuminating. Research, pair trades, and the opportunity to dig into something as complicated as Russian sovereign bonds gave him a glimpse of what deep fundamental analysis could look like.

He compensated for the rest by reading obsessively, everything he could get his hands on including the Wall Street Journal, the Financial Times, the Economist, and the Boston Globe. It was in the Globe that he kept noticing a company being sued repeatedly by the taxi unions - Uber.

There were seven people in the company's Boston office at the time, and a couple hundred companywide. Pérez-Benzo left Goldman and joined the startup, eventually building out the company's presence across New England where he focused on figuring out which demographics to target, which use cases to prioritize, and generating the demand that would become Uber New England.

At this point Pérez-Benzo had checked pure finance and operating a company off of his list, but he still had consulting to explore. In 2013 he joined IBM, where he worked across the firm's consulting and R&D divisions on dynamic optimization projects for large utilities. One project, using drones to improve crop yields on industrial farms, convinced him that the technology had far wider commercial applications.  

He left IBM to find out and put together a business using photogrammetry to create 3D models of mining stockpiles, rock quarries, and landfills, which he says is precisely the kind of high-value industrial survey work that couldn't easily be done any other way. He sold the company, AeroAnalytics, in 2019 to a family with quarry interests in southern Spain and the UAE.

Through all of it starting during his sophomore year at Princeton Pérez-Benzo had been investing on the side, applying Buffett’s famous cigar butt strategy; buying companies at a steep discount to fair value and holding them for several years until the value is realized. He had been compounding at roughly 20% annually, and when the sale of AeroAnalytics was finalized, he knew what his next challenge was.

"As soon as I'd sold the business I said ‘hey, this is another business, and it is called a hedge fund, and that is what I will do,” he tells OWL.

Pérez-Benzo ran separately managed accounts for two years before formally launching Sfumato Equity Holdings in August 2021. According to investor materials reviewed by OWL, the strategy has generated a net annualized return of roughly 59% since its August 2019 inception, compared to roughly 14% for the S&P 500 and roughly 10% for the Russell 2000 over the same period.

Sfumato’s strategy is value-oriented and built from the bottom up; the fund targets micro- and small-cap companies trading at a steep discount to fair value with a holding period framework of three to five years. The portfolio is intentionally concentrated, typically running 10 to 15 positions, and takes a long-only, global, all-sector approach.

Pérez-Benzo has deliberately kept Sfumato long-only. Short selling, he says, would change the way he has to think and take time away from the research that matters most -understanding why a given company is truly great and monitoring that thesis over time.

"There’s definitely a timing element to shorting, it’s very hard to time the market, and it's much easier to be correct on a long over a long time scale," he tells OWL. “Part of it is disposition, and part of it is just how I choose to spend my research time.”

Currently sitting at 15 positions, the makeup of Sfumato’s portfolio illustrates the love of learning about different things that Pérez-Benzo carries.

The fund’s holdings currently include Seneca Foods Corporation, the largest private label vegetable canning company in the United States; D-BOX, a Canadian haptics company that encodes premium movie seat vibrations to match on-screen action; PHI Group, a helicopter services business providing offshore transport for oil and gas workers and medical air transport; and Silvaco, a semiconductor digital modeling platform that allows engineers to simulate chip performance at an atomic level before the expensive process of fabrication begins.

"That's a fun time," Pérez-Benzo says, when asked about the variety.

Sfumato currently has a regulatory AUM of roughly $55 million made up of commitments from LPs including Patrick O'Shaughnessy, Founder and CEO of Colossus and venture firm Positive Sum, along with Howard Cooper's family office and a number of other foundations and family offices.

In a world of color-plus-geographical feature-named investment funds, Sfumato’s unique moniker comes from a technique mastered by Leonardo da Vinci - the soft, graduated blending of light and shadow visible in the Mona Lisa and The Virgin of the Rocks.

Pérez-Benzo sees a direct parallel between da Vinci's total command of his craft and the demands of serious investing. Achieving the sfumato effect, he explains, required da Vinci to have mastered shade, color, light, human anatomy, and the precise behavior of his brushes all at once.

"An investor needs to understand all the parts of a business; go-to-market strategy, supply and demand, economics, human psychology, and the finer points of financial statements," he tells OWL. "I like the parallel between the two disciplines."

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