From the October 01, 2010 issue of Futures Magazine • Subscribe!

Cervino: Managing a mountain of risk

When Davide Accomazzo and Mack Frankfurter had lunch back in 2004, basically to bitch about life in the corporate grind at UBS, they discovered that they had a lot in common and began to map commodity trading advisor Cervino Capital Management.

ImageThat, for one, was an interesting coincidence. Accomazzo was Italian and Frankfurter’s dad grew up in Switzerland. The two countries are split by the Matterhorn, Cervino in Italian, which would become the name of their CTA. “My family has been skiing on that mountain for three generations and Mack’s father grew up in Switzerland so we had this geographical icon that represented both of our heritages,” Accomazzo says.

Accomazzo had spent his entire adult career in trading and Frankfurter had worked with some of the most talented traders around on the operations side.

Frankfurter, as head of operations for the Echelon Group in the 1990s, made sure the firm’s $250 million managed futures business operated smoothly and worked with all-star traders such as Bill Dreiss and William Plummer. Frankfurter left Echelon in 1998 when it changed its focus away from managed futures, but he built on his strong operational expertise through several consulting gigs. Until his chance meeting with Accomazzo at UBS, he always planned on finding a sharp trader to partner with.

Frankfurter met many great traders, but they didn’t all succeed. “Some of them were successful in trading but not in business. A lot of them shot themselves in the foot,” Frankfurter says. “I am sort of a connoisseur of trading and traders. In Davide I saw a unique and rare combination of skills.”

ImageFrankfurter says the best traders can balance quantitative and qualitative elements, which allows them to stay disciplined while also being able to adapt to changing market conditions.

Accomazzo became interested in trading options and derivatives while studying for his MBA at Pepperdine and upon graduation scored a job at Jefferies in New York as a convertible bond trader. He went back to Italy to work in private banking for a Monaco-based firm before returning to the States to launch a CTA and then to work for the private banking arm of UBS.

“To be frank, we both hated the banking side,” Accomazzo says. “So one day we were having lunch and complaining about the corporate culture of the Swiss bank and we looked at each other and [saw] we are very complimentary. He is one of the best at the operational side and I have traded every market and every derivative in my career so we started to discuss Cervino.”

Frankfurter thought, “What are we doing? We really should be doing what we do best.”

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