Today we're launching OWL Profiles, a series that takes a closer look at investment managers - their backgrounds, how they think, what they've built, and what shapes their approach to investing. Each profile is the product of conversations with the manager and research into the firm using OWL's data. We hope you enjoy getting to know these managers, and if there's anyone you think we should profile, please reach out!

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 and Florida in the 1980s had unraveled most of it before he was born.

"The stories of my grandparents’ success were very inspiring to me even as a boy," he tells OWL. "The prospect of gaining back generational wealth for my family by going into business was a major motivating factor as I began my career."

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 three areas: 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.

"You could call that the intellectual genesis of my interest in investing," he tells OWL. “While I experimented across three different areas of business during the following decade, I kept up a hobby of investing in microcaps and small caps that would eventually turn into Sfumato.”

Pérez-Benzo's first stop was Goldman Sachs's sales and trading desk, which while not the right fit for a budding value investor, was nonetheless illuminating and a good training ground. Research, pair trades, and the opportunity to dig into complex Russian bond trades gave him a glimpse of what deep fundamental analysis could look like.

Early in his career he found it valuable to read as widely as possible, taking in the Wall Street Journal, the New York Times, the Financial Times, the Economist, and regional newspapers. It was in the Boston 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 helping build 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 algorithms for companies with large fleets. 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 an aerial survey business using drones and photogrammetry to create 3D models of mining stockpiles, rock quarries, and landfills, which allowed for faster, safer, and more accurate surveys than ever before. He sold the company, AeroAnalytics, in 2019 to a family with industrial interests in southern Europe.

Throughout this decade of experimentation beginning 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 looked at my investments in public equities over the years and realized, ‘hey, this is another business, and it’s called a hedge fund. I’ll give that a go!” 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. (Allocators using OWL can see more detailed performance here).

According to a review of materials shared with OWL, the largest contributors to Sfumato’s returns include protective film and coating manufacturer Xpel (owned from 2019-2022), collectibles authentication and grading company Collectors Universe (owned from 2020-2021, acquired by a group including Nat Turner, Steve Cohen and D1 Capital in February 2021), and current holding Seneca Foods Corporation, the largest private-label vegetable canning company in the United States (owned since 2023).

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 the aforementioned Seneca Foods Corporation; 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 $60 million made up of investments 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.

“This guy lives, eats, and breathes the names that he's invested in, and you don’t run into a lot of managers like that,” Cooper tells OWL when asked why he invested with Pérez-Benzo. “I was an equities trader so I love asking every long/short guy we talk to about a few high-conviction names and keep digging until they don’t know the answer, and that never happened with Andy, I couldn’t catch him on anything, which really impressed me.”

“Andy and I spent a couple of years getting breakfast every two weeks with a small group of friends focused on improving each other’s businesses, he is an investor’s investor,” O’Shaughnessy tells OWL. “I recognized during that time that he could become truly great. His track record is world-class and his firm is finally getting the attention it deserves from top allocators.”

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

Pérez-Benzo sees a direct parallel between the artists’ total command of their craft and the demands of serious investing. Achieving the sfumato effect, he explains, required da Vinci and Raphael to have mastered shade, color, light, human anatomy, and the precise behavior of their 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.”

Sfumato has shared documents and historical letters on OWL which can be viewed by LP users here.