“Stick your money with us. Let us invest it. When the market turns around, come back and get it,” Francis Koenig says, sipping his chilled Labrusca at a Midtown Manhattan restaurant. In troubled times, a pitch for a safe bond fund, perhaps? Bondage might be more like it. Koenig is the founder and CEO of AdultVest, which he bills as the adult-entertainment industry’s first hedge fund, and according to him, he’s doing just fine. His fund (with a mix of public and privately held assets) is up 50 percent this year, he says, based on “very conservative” outside appraisals.
In theory, depressed financial markets signal a buying opportunity, but Koenig believes that investors are now more cautious. Instead of seeking assets that are “on sale,” they’re looking for fundamentally different opportunities—which AdultVest is poised to deliver. “I had a meeting last night with about 15 major players,” Koenig tells me. “All of them were very interested in the deal, and I believe about half of them will actually invest.” Koenig wouldn’t reveal the project to be financed, and he danced around names, saying only that I would recognize them—a coyness that, to be fair, both hedge funds and adult entertainment share. He says he met many of them at the Alternative Investment News Hedge Fund Industry Awards last June, when AdultVest won Hedge Fund Launch of the Year. (Other honorees included the Blackstone Group and the Teacher Retirement System of Texas.)