New Portfolio Shaped By Vision Of Upheaval

(Dow Jones) Twin Focus Capital Partners is turning a vision of fundamental economic upheaval into an investment vehicle.

The multifamily office's Postcatastrophe Economy Portfolio is meant to capitalize on a traumatic shift from dependence on debt and foreign oil to a new system based on the development of transportation, energy and communications infrastructure.

The managed account is "a way to make a portfolio forward looking," said Twin Focus managing partner Paul Karger. Equally, he added, it provides a means for play-it-safe investors to add risk to predominantly conservative investment programs.

The Postcatastrophe portfolio reflects the macroeconomic views of Eric Janszen, a serial entrepreneur and economic advisor to Twin Focus since its inception in 2006.

He thinks the U.S. government's policy of bailing out "dying industries" will fail, and the next big financial crisis--due within a couple of years--will force policymakers to push the financial-service, insurance and real-estate businesses back into their subordinate roles in the economy and get behind for-profit projects that help move goods and information more quickly and cheaply.

"This is about getting back to innovation to build the next generation of technology companies," said Janszen.

But Janszen doesn't expect this to occur overnight or smoothly. It is predicated on a financial downturn scary enough to stifle partisan political bickering. And it relies on widespread acceptance of the idea--already growing in U.S. government and military circles, he contends--that we're fast running out of petroleum cheap enough to fuel real growth.

Janszen is an environmental scientist by training who has led technology companies, advised private-equity firms and written books and articles. "So far we're not in game" when it comes to finding market-viable alternatives to crude oil, he said. "But we have the advantage of being the country that invents and commercializes solutions. It's what we're good at."

He concedes that his thesis--part prognosis, part prescription--calls for a leap of faith, but that doesn't worry Twin Focus.

"It's a long-term forecast that might not play out year to year," said Karger. "But [Janszen] was right about the past 10 years."

As noted publicly on Janszen's 12-year-old website iTulip.com, he abandoned stocks in March 2000, and subsequently moved into Treasurys and gold. Only now is he returning to equities that play into his view of the economy.

Karger emphasized that there are reasons beyond Janszen's track record to consider Twin Focus' Postcatastrophe account.

Though designed to capture opportunities that spring up as the economy evolves, it has built-in risk-mitigation characteristics. Also, it is meant to function as part of a broadly diversified investment strategy.

"This is about taking a balanced approach to some compelling themes," said Karger.

Boston-based Twin Focus manages about $800 million, mainly for entrepreneurs with, on average, $75 million to invest. The Postcatastrophe portfolio has an investment minimum of $250,000.