Controversial Investor Andy D Talks Making Big Bets Early, Work Ethic, and if You Don’t Want to Bet With Him, Don’t Bet Against Him Because He’s Proven Leprechauns Do Exist
Andy DeFrancesco has built a career out of a knack for seeing around corners and a willingness to take risks ahead of the crowd. Those traits have led the 49-year-old serial investor, fund manager and motor-racing fan into countries and asset plays that some might view as a bit over the top, or at least highly contrarian.
There was, for example, the 2006 investment in an oil wells in drug-plagued and violent Colombia when he and his backers were doing quite well investing in the safer locales in the oil and gas fields of the eastern United States. Then, there was DeFrancesco’s bet on a tiny gold mine in Tyrone County in Northern Ireland. That particular venture sounded at the time more like the setup for a joke about chasing leprechaun’s than a serious investment.
DeFrancesco, a Toronto native who built a two-decade career working as an equity trader; banker and then fund manager at firms like Merrill Lynch Canada, Canaccord Genuity, and then a private family office in that city’s Bay Street financial district, concedes that he got his share of ribbing at the time about leprechauns and finding a mythical pot of gold at the end of a rainbow.
With these and other investments, however, the stockily-built DeFrancesco, who stands just five feet, five inches tall, has often gotten the last laugh. He and his partners profited nicely on both the Colombian oil and Irish gold investments as well as both a group of Canadian investors and his own immediate family. “About $42mm was invested in Delavaco Energy which was sold 23 months later for $102mm. This particular investment helped my family launch Delavaco Holdings, the springboard for our multiple successes.”
But it’s his ability to have seen the promise in cannabis – starting in 2013 – that is arguably his boldest move to date, filled with big scores and even a few bumps and stock swoons along the way. His first bet on Toronto-based Aphria, which became publicly-traded, started to pay off big when it became apparent that Canada was going to pass a law legalizing recreational marijuana use.
“It went from a beach with fun waves where the kids love to play to a tsunami of positive news,” says DeFrancesco, during a recent phone call from his family’s second home in Miami. “And all of a sudden, I was one of the guys everyone was calling.”
In recent years, DeFrancesco’s commitment to both medicinal and recreational marijuana has morphed into a wide-ranging collection of private and publicly-traded companies and assets in the U.S., Canada, and abroad. Last year, he became chairman and chief investment officer of SOL Global Investments, a Toronto-based company that owns a wide variety of cannabis assets, including a collection of recreational-pot cultivation and dispensary assets in the U.S., principally in Michigan, Florida, and California. DeFrancesco’s family owns a sizable share of the common stock of SOL Global.
But in recent months, DeFrancesco and his management team decided that the markets weren’t giving SOL Global the value the underlying businesses are worth. So moving forward, the company is being broken up into three corporate pure plays — the first, Bluma Wellness, will be a “multi-state operator” of U.S. marijuana cultivation and dispensaries; the second,HeavenlyRx, will be a seed to shelf, grower, manufacturer and marketer of purely medicinal or CBD-based wellness cannabis products; and the third, SOL Investment Group, which DeFrancesco will run as chief executive, will be a hybrid investment fund, a cross between private equity and hedge taking positions in all areas Andy and his team see opportunities in, including cannabis-related ventures, as well as being large shareholders of the aforementioned Bluma Wellness and HeavenlyRx.
Bluma Wellness, which will play the growth of recreational cannabis in the U.S., will arguably become the most prominent of the three companies. It will be led by Brady Cobb, a south Florida lawyer whom DeFrancesco tapped last year to be CEO of the company that morphed into SOL Global. (DeFrancesco also recruited Paul Norman, a Briton and former President of Kelloggs North America with an extensive consumer-products background, to lead Heavenly RX, along with appointing world renowned Fox TV host and author Judge Jeanine Pirro to the board.)
Cobb, with his clean-cut good looks and corporate polish, serves as the perfect counterpart to the genuine but blunt and filter-lacking, what you see is what you get, jeans, jacket, and Adidas-wearing DeFrancesco. Cobb regularly talks up the cannabis industry on cable-business news and has a compelling personal story worthy of a Hollywood movie. The son of the late Clyde Walton Cobb, a larger-than-life former pot smuggler who did a stint in prison for his crimes, the younger Cobb has spent years working behind the scenes to successfully change marijuana laws on both the state and national level, including lobbying for the passage of the 2018 Farm Bill, which among other provisions has allowed hemp to be turned into a variety of medicinal or CBD-based cannabis products. It didn’t hurt that Senate Majority Leader Mitch McConnell, R-Ken., represents farmers in his state who see opportunity in hemp production.
DeFrancesco calls Brady, who once served as his lawyer when he was seeking to obtain Florida cannabis licenses, “smart as hell.”
For all his successes as an investor, DeFrancesco, a father of two boys and two girls, is used to sharing the media limelight with his oldest son, Devlin, 19, who has inherited his father’s penchant for taking risks. Devlin, a super preemie, born 4 months early at only pound and given his last rights more than once plies his trade on racetracks in Europe and the U.S., strapped into Formula 3 and IMSA Daytona Prototype cars.
Though DeFrancesco admits that he’s scared to death watching his son driving around tracks at speeds in excess of 195 miles per hour, he fully supports his career choice. “I could deter him but at the end of the day, he is going to make his own decision,” says DeFrancesco. “I don’t want him to look back and say ‘you gave me the wrong advice.’ I am also a huge racing fan.”
DeFrancesco, whose family invests in collector cars, owns the 1989 Ferrari F40 from the late David Peterson of the Peterson Automotive Museum In LA, admits to racking up his share of speeding tickets over the years and has passed his love of professional motor racing to his two sons. The boys inadvertently led DeFrancesco to his next big investment play: the esports business.
“I watched my sons with headphones on play video racing games in the middle of the night against thousands of other kids in places like Australia and England,” he says. “When my younger son Lachlan was 11 or 12, he could name every soccer player in every position in England’s Premier League and I couldn’t figure out how. It turns out that he learned it all from playing e-sports.”
In the past two years, DeFrancesco has taken big stakes in Millennial Esports, a Canadian-based company with operations in North America and Europe, and Stream Hatchet, a Spanish company that compiles analytics on e-sports activity.
“Most people might think that esports has nothing to do with the cannabis business,” he says. “ But one of the biggest demographics using recreational cannabis is gamers. Don’t tell me you can’t picture a group of college kids and early 20-somethings sitting in the basement of the house, stoned and playing video games.”
It might seem unseemly to profit from this kind of adolescent behavior. But DeFrancesco doesn’t claim to be a paragon of virtue. He’s a hard-nosed investor who gets a kick out of spotting sociological and business trends and then investing in them before others catch on.
“I’ve been told so many times by doubters that ‘you are nuts because you will never get that done’ and that for me is like hitting the nitrous button in a street race,” says DeFrancesco, referring to the button on a race-car that quickly boosts the horsepower of a car engine. “I sometimes find it more satisfying to prove negative people wrong than the financial reward of an investment.”
When asked for a few words of wisdom for the next generation of investors, DeFrancesco offered the following sage advice, “Always be positive. Always be loyal. Surround yourself with people smarter than you. Work way harder than your competition and avoid stupid people at all costs. And the most important, believe in yourself no matter what anyone says because I’ve proven that leprechauns do exist more times than once.”