Correspondence 0001193125-24-187498 from SKYBRIDGE OPPORTUNITY FUND LLC (CIK 0001181848)
SKYBRIDGE OPPORTUNITY FUND LLC (CIK 0001181848)
Date: July 29, 2024 · CIK: 0001181848 · Accession: 0001193125-24-187498
AI Filing Summary & Sentiment
File numbers found in text: 333-265264, 811-21190
Letter
VIA EDGAR Ms. Lisa Larkin Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549
Dear Ms. Larkin:
On behalf of SkyBridge Multi-Adviser Hedge Fund Portfolios LLC (the “Company”), we hereby transmit for filing the Company’s responses to the telephonic comments provided by you on behalf of the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC” or the “Commission”) to Kenneth E. Burdon and Erin M. Randall of Simpson Thacher & Bartlett LLP, counsel for the Company, regarding the Company’s Registration Statement on Form N-2 (the “Registration Statement”) filed with the Commission on May 30, 2024. To assist your review, the Staff’s comments are italicized below and have been summarized to the best of our understanding. We have discussed the Staff’s comments with representatives of the Company. The Company’s responses to the Staff’s comments are set out immediately under the restated comment. Unless otherwise indicated, defined terms used herein have the meanings set out in the Registration Statement. Where the Company has revised disclosure in the Registration Statement in response to a comment, additions are underlined and deletions are struck.
Comments Related to Crypto Assets
Comment 1
Disclosure on page 1 states, “The Investment Funds in which the Company invests, whether hedged or not, are often described as ‘hedge funds’ and may provide exposure to one or more instruments, including, but not limited to, equities, debt, structured products, cryptocurrencies and other digital assets, derivatives, real estate and other alternative assets.” In the disclosure, please clarify the meaning of “other digital assets” and “other alternative assets.”
NEW YORK
BEIJING
HONG KONG
HOUSTON
LONDON
LOS ANGELES
PALO ALTO
SÃO PAULO
TOKYO
Ms. Lisa Larkin
July 29, 2024
Response 1
The Company has revised the disclosure as follows:
The Investment Funds in which the Company invests, whether hedged or not, are often described as ‘hedge funds’ and may provide exposure to one or more instruments, including, but not limited to, equities, debt, structured products, cryptocurrencies and other digital assets such as crypto assets, stablecoins and non-fungible tokens, derivatives, real estate and other alternative assets such as private equity, credit and infrastructure.
Comment 2
The Staff notes that the disclosure references “cryptocurrencies” throughout. Please clarify in the disclosure that although crypto assets have been called cryptocurrencies, they are not widely accepted as a means of payment. Also, please generally use the term “crypto asset” or “digital asset” when referring to these assets.
Response 2
The Company has added the requested disclosure. Further, the Company has revised disclosure throughout to remove all but one reference to “cryptocurrency” and “cryptocurrencies.” The Company has maintained one reference to “cryptocurrencies” in the second sentence under “Investment Related Risks – Digital Assets” when explaining the various terms commonly used to refer to digital assets. Please also see Appendix B for a reproduction of all of the revised disclosure under “Investment Related Risks – Digital Assets.”
Comment 3
Disclosure on page 2 states, “The Company also seeks exposure to digital assets (as defined herein) by investing in Investment Funds, derivatives or vehicles that provide exposure to digital assets.” Please define “digital assets” here at first use or add a cross-reference to the page number or section heading.
Response 3
The Company hereby confirms that the requested change has been made.
Comment 4
Disclosure on page 3 states, “The Adviser and its personnel use a wide range of resources, including its well-established alternative investments network, to identify attractive Investment Funds, direct investments and promising investment strategies for consideration.” Please confirm supplementally whether “direct investments” includes any digital assets. If not, please add disclosure clarifying that the Company does not invest directly in digital assets.
Ms. Lisa Larkin
July 29, 2024
Response 4
The Company hereby confirms that “direct investments” does not include digital assets. The Company has added the requested disclosure and revised the disclosure under the section “Investment Program – Investment Strategies – Cryptocurrency and Digital Assets,” which it has renamed to “Investment Program – Investment Strategies – Digital Assets,” as follows; please also see Appendix A for a reproduction of all of the revised disclosure under “Investment Program – Investment Strategies – Digital Assets”:
The Company and Investment Funds may hold long and short positions in digital assets.
Comment 5
Disclosure on page 23 states, “Investments by the Company and/or Investment Funds may also be made in companies providing technologies related to digital assets or other emerging technologies.” Please add disclosure explaining the meaning of “related” to digital assets.
Response 5
The Company has revised the disclosure as follows:
Investments by the Company and/or Investment Funds may also be made in companies providing technologies related to digital assets, including digital asset miners, payment technologies, digital security or crypto trading platforms, or other emerging technologies.
Comment 6(a)
Disclosure on page 29 includes a description of “Cryptocurrency and Digital Assets” as part of the Company’s investment strategy. Please provide risk disclosure explaining that Investment Funds providing exposure to a particular digital asset may be determined to be operating as unregistered investment companies to the extent that the crypto assets in which they invest are determined to be offered and sold as investment contracts, and thus as securities. Please also disclose that companies engaging in crypto asset-related activities in which the Company may invest may be determined to be engaging in unregistered activities under the federal securities laws to the extent that the crypto assets with which they engage are determined to be offered and sold as investment contracts, and thus as securities.
Response 6(a)
The Company has revised the disclosure under “Investment Related Risks – Digital Assets” as follows; please also see Appendix B for a reproduction of all of the revised disclosure under “Investment Related Risks – Digital Assets”:
In addition, the regulatory landscape for digital assets is undefined and rapidly developing. Regulation of digital assets can vary significantly among non-U.S. or U.S. federal, state and local jurisdictions and is subject to significant uncertainty. Federal, state or foreign governments may restrict the use and exchange of digital assets at any time, and regulators in the U.S. and other jurisdictions have taken enforcement
Ms. Lisa Larkin
July 29, 2024
actions against, and continue to scrutinize, various digital asset participants and practices. To the extent the digital assets to which a portfolio company provides exposure are determined to be offered and sold as investment contracts, and thus as securities, certain portfolio companies may be determined to be engaging in unregistered activities and operating as unregistered investment companies, unregistered securities exchanges, or unregistered broker-dealers. In such a scenario, certain portfolio companies could become subject to additional regulatory requirements, including registration under the Investment Company Act or the Securities Exchange Act. Changes in the market or regulatory landscape could limit the ability of Investment Funds to pursue investment strategies in digital assets, or cause digital assets to lose significant, or all, of their value. Further, companies with exposure to digital assets or technologies may operate in highly regulated industries, resulting in higher regulatory scrutiny and risk of regulatory action.
The Company has also added a cross reference to the Digital Assets risk as the last sentence under the section “Investment Program – Investment Strategies – Cryptocurrency and Digital Assets,” which it has renamed to “Investment Program – Investment Strategies – Digital Assets”; please also see Appendix A for a reproduction of all of the revised disclosure under “Investment Program – Investment Strategies – Digital Assets.”
Comment 6(b)
Please do not refer to the markets on which crypto assets trade as exchanges, as these entities often are not registered as national securities exchanges under Section 6 of the Securities Exchange Act. Please refer to them as crypto asset trading platforms or use another similar term that does not suggest that they are such a registered exchange.
Response 6(b)
The Company has revised the disclosure referring to the markets on which crypto assets trade from “exchanges” to “trading platforms.”
Comment 7
To the extent the Company may have significant exposure to a particular crypto asset which is bitcoin or ether, please specifically describe the asset and its associated blockchain, including the applications and use cases that they have been designed to support. Please provide disclosure explaining the differences between crypto assets and their respective blockchains, which are not uniform in terms of their features, use cases and performance. In this regard, because bitcoin and ether and the bitcoin and ethereum blockchains are cited in the disclosure, please consider describing how those blockchains, and ether and bitcoin, differ from one another in terms of intended applications and use cases, among other things. Finally, please explain that despite these differences, the price movements of ether and bitcoin generally have been highly correlated and that ether has generally been more volatile and thus tends to rise more than bitcoin on days that bitcoin rises and to fall more than bitcoin on the days that bitcoin falls.
Ms. Lisa Larkin
July 29, 2024
Response 7
The Company has added the following disclosure after the first paragraph under the section “Investment Related Risks – Digital Assets”; please also see Appendix B for a reproduction of all of the revised disclosure under “Investment Related Risks – Digital Assets”:
Bitcoin is the native token on the bitcoin network. As with other crypto assets, bitcoin and the bitcoin blockchain have been designed to support a number of applications and use cases. For bitcoin, these include serving as a medium of exchange (e.g., digital cash) and as a durable store of value (e.g., digital gold). The bitcoin network’s uses and capabilities are narrower when compared to the ethereum network, which facilitates smart contracts and the issuance of other non-native tokens.
Ether is the native token on the ethereum network, but users may create additional tokens, the ownership of which is recorded on the ethereum network. As with other crypto assets, ether and the ethereum blockchain have been designed to support a number of applications and use cases. For ether, these include: serving as a medium or exchange and a durable store of value, facilitating the use of smart contracts and decentralized products and platforms, permitting the issuance and exchange of non-native tokens (including non-fungible tokens and asset-backed tokens) and supporting various “layer 2” projects (as discussed below). Compared to the bitcoin network, which is solely intended to record the ownership of bitcoin, the intended uses of the ethereum network are broader.
During certain periods, the spot price movements of ether and bitcoin generally have been correlated, and during such periods, the spot prices of ether have generally been more volatile than the spot prices of bitcoin (i.e., rising more than the spot prices of bitcoin on days that the spot prices of bitcoin rise and falling more than bitcoin on days that the spot prices of bitcoin fall). During other periods, this correlation and relative volatility has not historically been observed. There is no guarantee that any of these trends will continue or that the prices of ether or bitcoin will be dependent upon, or otherwise related to, each other or that the relative volatility of spot bitcoin and spot ether will continue. Moreover, such correlation and relative volatility may not be observed depending upon the chosen historical measurement period.
Ms. Lisa Larkin
July 29, 2024
Comment 8
The Staff notes that “Bitcoin” is capitalized sometimes in the disclosure. When referring to the native crypto asset of the bitcoin blockchain, please use a lowercase “b.”
Response 8
The Company has revised the disclosure accordingly.
Comment 9(a)
The Staff references the disclosure under “Investment Related Risks – Digital Assets” on page 48. Please disclose that the value of crypto assets has been and may continue to be substantially dependent on speculation such that trading and investing in crypto assets generally may not be based on fundamental analysis.
Response 9(a)
The Company has revised the disclosure under “Investment Related Risks – Digital Assets” as follows; please also see Appendix B for a reproduction of all of the revised disclosure under “Investment Related Risks – Digital Assets”:
The values of digital assets may notshould not be expected to be connected or correlated to traditional economic or market forces, and the value of the investments of Investment Funds in digital assets could decline rapidly, including to zero. Trading and investing in digital assets or assets linked to digital assets may be speculative and may generally not be based on fundamental investment analysis.
Comment 9(b)
Please also discuss the exposure of crypto assets to instability in other speculated parts of the blockchain/crypto industry such that an event is not necessarily related to the security or utility of a particular blockchain and nonetheless precipitates a significant decline in the price of crypto assets. Please disclose the risks related to the fragmentation and lack of regulatory compliance of spot markets for crypto assets.
Response 9(b)
The Company has revised the disclosure under “Investment Related Risks – Digital Assets” as follows; please also see Appendix B for a reproduction of all of the revised disclosure under “Investment Related Risks – Digital Assets”:
Digital assets and related derivatives may be traded on platforms that are unregulated, highly fragmented and often located outside the U.S. As a result of the lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote digital assets in a way that artificially increases the price of such digital assets). Investors may be more exposed to the risk of theft, fraud and market manipulation than when investing in more traditional asset classes. Some digital asset exchangesplatforms have curtailed their activities, stopped operating or permanently shut down, and other digital asset exchangesplatforms
Ms. Lisa Larkin
July 29, 2024
may do so in the future due to fraud, theft, disruption, technical glitches, hackers, malware or security compromises, failures in the underlying blockchain, ledger or software, or actions by governments and regulators. Although the Company does not invest directly in digital assets, events impacting the price of digital assets across all digital asset trading platforms could impact the price and market for such digital assets, and therefore the performance of the Company. Investors in digital assets may have little or no
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CORRESP 1 filename1.htm CORRESP Simpson Thacher & Bartlett LLP 425 LEXINGTON AVENUE NEW YORK, NY 10017 TELEPHONE: +1-212-455-2000 FACSIMILE: +1-212-455-2502 Direct Dial Number +1-617-778-9001 E-mail Address kenneth.burdon@stblaw.com VIA EDGAR July 29, 2024 Re: SkyBridge Multi-Adviser Hedge Fund Portfolios LLC Securities Act File No. 333-265264, Investment Company Act File No. 811-21190 Ms. Lisa Larkin Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549 Dear Ms. Larkin: On behalf of SkyBridge Multi-Adviser Hedge Fund Portfolios LLC (the “Company”), we hereby transmit for filing the Company’s responses to the telephonic comments provided by you on behalf of the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC” or the “Commission”) to Kenneth E. Burdon and Erin M. Randall of Simpson Thacher & Bartlett LLP, counsel for the Company, regarding the Company’s Registration Statement on Form N-2 (the “Registration Statement”) filed with the Commission on May 30, 2024. To assist your review, the Staff’s comments are italicized below and have been summarized to the best of our understanding. We have discussed the Staff’s comments with representatives of the Company. The Company’s responses to the Staff’s comments are set out immediately under the restated comment. Unless otherwise indicated, defined terms used herein have the meanings set out in the Registration Statement. Where the Company has revised disclosure in the Registration Statement in response to a comment, additions are underlined and deletions are struck. Comments Related to Crypto Assets Comment 1 Disclosure on page 1 states, “The Investment Funds in which the Company invests, whether hedged or not, are often described as ‘hedge funds’ and may provide exposure to one or more instruments, including, but not limited to, equities, debt, structured products, cryptocurrencies and other digital assets, derivatives, real estate and other alternative assets.” In the disclosure, please clarify the meaning of “other digital assets” and “other alternative assets.” NEW YORK BEIJING HONG KONG HOUSTON LONDON LOS ANGELES PALO ALTO SÃO PAULO TOKYO Ms. Lisa Larkin July 29, 2024 Response 1 The Company has revised the disclosure as follows: The Investment Funds in which the Company invests, whether hedged or not, are often described as ‘hedge funds’ and may provide exposure to one or more instruments, including, but not limited to, equities, debt, structured products, cryptocurrencies and other digital assets such as crypto assets, stablecoins and non-fungible tokens, derivatives, real estate and other alternative assets such as private equity, credit and infrastructure. Comment 2 The Staff notes that the disclosure references “cryptocurrencies” throughout. Please clarify in the disclosure that although crypto assets have been called cryptocurrencies, they are not widely accepted as a means of payment. Also, please generally use the term “crypto asset” or “digital asset” when referring to these assets. Response 2 The Company has added the requested disclosure. Further, the Company has revised disclosure throughout to remove all but one reference to “cryptocurrency” and “cryptocurrencies.” The Company has maintained one reference to “cryptocurrencies” in the second sentence under “Investment Related Risks – Digital Assets” when explaining the various terms commonly used to refer to digital assets. Please also see Appendix B for a reproduction of all of the revised disclosure under “Investment Related Risks – Digital Assets.” Comment 3 Disclosure on page 2 states, “The Company also seeks exposure to digital assets (as defined herein) by investing in Investment Funds, derivatives or vehicles that provide exposure to digital assets.” Please define “digital assets” here at first use or add a cross-reference to the page number or section heading. Response 3 The Company hereby confirms that the requested change has been made. Comment 4 Disclosure on page 3 states, “The Adviser and its personnel use a wide range of resources, including its well-established alternative investments network, to identify attractive Investment Funds, direct investments and promising investment strategies for consideration.” Please confirm supplementally whether “direct investments” includes any digital assets. If not, please add disclosure clarifying that the Company does not invest directly in digital assets. 2 Ms. Lisa Larkin July 29, 2024 Response 4 The Company hereby confirms that “direct investments” does not include digital assets. The Company has added the requested disclosure and revised the disclosure under the section “Investment Program – Investment Strategies – Cryptocurrency and Digital Assets,” which it has renamed to “Investment Program – Investment Strategies – Digital Assets,” as follows; please also see Appendix A for a reproduction of all of the revised disclosure under “Investment Program – Investment Strategies – Digital Assets”: The Company and Investment Funds may hold long and short positions in digital assets. Comment 5 Disclosure on page 23 states, “Investments by the Company and/or Investment Funds may also be made in companies providing technologies related to digital assets or other emerging technologies.” Please add disclosure explaining the meaning of “related” to digital assets. Response 5 The Company has revised the disclosure as follows: Investments by the Company and/or Investment Funds may also be made in companies providing technologies related to digital assets, including digital asset miners, payment technologies, digital security or crypto trading platforms, or other emerging technologies. Comment 6(a) Disclosure on page 29 includes a description of “Cryptocurrency and Digital Assets” as part of the Company’s investment strategy. Please provide risk disclosure explaining that Investment Funds providing exposure to a particular digital asset may be determined to be operating as unregistered investment companies to the extent that the crypto assets in which they invest are determined to be offered and sold as investment contracts, and thus as securities. Please also disclose that companies engaging in crypto asset-related activities in which the Company may invest may be determined to be engaging in unregistered activities under the federal securities laws to the extent that the crypto assets with which they engage are determined to be offered and sold as investment contracts, and thus as securities. Response 6(a) The Company has revised the disclosure under “Investment Related Risks – Digital Assets” as follows; please also see Appendix B for a reproduction of all of the revised disclosure under “Investment Related Risks – Digital Assets”: In addition, the regulatory landscape for digital assets is undefined and rapidly developing. Regulation of digital assets can vary significantly among non-U.S. or U.S. federal, state and local jurisdictions and is subject to significant uncertainty. Federal, state or foreign governments may restrict the use and exchange of digital assets at any time, and regulators in the U.S. and other jurisdictions have taken enforcement 3 Ms. Lisa Larkin July 29, 2024 actions against, and continue to scrutinize, various digital asset participants and practices. To the extent the digital assets to which a portfolio company provides exposure are determined to be offered and sold as investment contracts, and thus as securities, certain portfolio companies may be determined to be engaging in unregistered activities and operating as unregistered investment companies, unregistered securities exchanges, or unregistered broker-dealers. In such a scenario, certain portfolio companies could become subject to additional regulatory requirements, including registration under the Investment Company Act or the Securities Exchange Act. Changes in the market or regulatory landscape could limit the ability of Investment Funds to pursue investment strategies in digital assets, or cause digital assets to lose significant, or all, of their value. Further, companies with exposure to digital assets or technologies may operate in highly regulated industries, resulting in higher regulatory scrutiny and risk of regulatory action. The Company has also added a cross reference to the Digital Assets risk as the last sentence under the section “Investment Program – Investment Strategies – Cryptocurrency and Digital Assets,” which it has renamed to “Investment Program – Investment Strategies – Digital Assets”; please also see Appendix A for a reproduction of all of the revised disclosure under “Investment Program – Investment Strategies – Digital Assets.” Comment 6(b) Please do not refer to the markets on which crypto assets trade as exchanges, as these entities often are not registered as national securities exchanges under Section 6 of the Securities Exchange Act. Please refer to them as crypto asset trading platforms or use another similar term that does not suggest that they are such a registered exchange. Response 6(b) The Company has revised the disclosure referring to the markets on which crypto assets trade from “exchanges” to “trading platforms.” Comment 7 To the extent the Company may have significant exposure to a particular crypto asset which is bitcoin or ether, please specifically describe the asset and its associated blockchain, including the applications and use cases that they have been designed to support. Please provide disclosure explaining the differences between crypto assets and their respective blockchains, which are not uniform in terms of their features, use cases and performance. In this regard, because bitcoin and ether and the bitcoin and ethereum blockchains are cited in the disclosure, please consider describing how those blockchains, and ether and bitcoin, differ from one another in terms of intended applications and use cases, among other things. Finally, please explain that despite these differences, the price movements of ether and bitcoin generally have been highly correlated and that ether has generally been more volatile and thus tends to rise more than bitcoin on days that bitcoin rises and to fall more than bitcoin on the days that bitcoin falls. 4 Ms. Lisa Larkin July 29, 2024 Response 7 The Company has added the following disclosure after the first paragraph under the section “Investment Related Risks – Digital Assets”; please also see Appendix B for a reproduction of all of the revised disclosure under “Investment Related Risks – Digital Assets”: Bitcoin is the native token on the bitcoin network. As with other crypto assets, bitcoin and the bitcoin blockchain have been designed to support a number of applications and use cases. For bitcoin, these include serving as a medium of exchange (e.g., digital cash) and as a durable store of value (e.g., digital gold). The bitcoin network’s uses and capabilities are narrower when compared to the ethereum network, which facilitates smart contracts and the issuance of other non-native tokens. Ether is the native token on the ethereum network, but users may create additional tokens, the ownership of which is recorded on the ethereum network. As with other crypto assets, ether and the ethereum blockchain have been designed to support a number of applications and use cases. For ether, these include: serving as a medium or exchange and a durable store of value, facilitating the use of smart contracts and decentralized products and platforms, permitting the issuance and exchange of non-native tokens (including non-fungible tokens and asset-backed tokens) and supporting various “layer 2” projects (as discussed below). Compared to the bitcoin network, which is solely intended to record the ownership of bitcoin, the intended uses of the ethereum network are broader. During certain periods, the spot price movements of ether and bitcoin generally have been correlated, and during such periods, the spot prices of ether have generally been more volatile than the spot prices of bitcoin (i.e., rising more than the spot prices of bitcoin on days that the spot prices of bitcoin rise and falling more than bitcoin on days that the spot prices of bitcoin fall). During other periods, this correlation and relative volatility has not historically been observed. There is no guarantee that any of these trends will continue or that the prices of ether or bitcoin will be dependent upon, or otherwise related to, each other or that the relative volatility of spot bitcoin and spot ether will continue. Moreover, such correlation and relative volatility may not be observed depending upon the chosen historical measurement period. 5 Ms. Lisa Larkin July 29, 2024 Comment 8 The Staff notes that “Bitcoin” is capitalized sometimes in the disclosure. When referring to the native crypto asset of the bitcoin blockchain, please use a lowercase “b.” Response 8 The Company has revised the disclosure accordingly. Comment 9(a) The Staff references the disclosure under “Investment Related Risks – Digital Assets” on page 48. Please disclose that the value of crypto assets has been and may continue to be substantially dependent on speculation such that trading and investing in crypto assets generally may not be based on fundamental analysis. Response 9(a) The Company has revised the disclosure under “Investment Related Risks – Digital Assets” as follows; please also see Appendix B for a reproduction of all of the revised disclosure under “Investment Related Risks – Digital Assets”: The values of digital assets may notshould not be expected to be connected or correlated to traditional economic or market forces, and the value of the investments of Investment Funds in digital assets could decline rapidly, including to zero. Trading and investing in digital assets or assets linked to digital assets may be speculative and may generally not be based on fundamental investment analysis. Comment 9(b) Please also discuss the exposure of crypto assets to instability in other speculated parts of the blockchain/crypto industry such that an event is not necessarily related to the security or utility of a particular blockchain and nonetheless precipitates a significant decline in the price of crypto assets. Please disclose the risks related to the fragmentation and lack of regulatory compliance of spot markets for crypto assets. Response 9(b) The Company has revised the disclosure under “Investment Related Risks – Digital Assets” as follows; please also see Appendix B for a reproduction of all of the revised disclosure under “Investment Related Risks – Digital Assets”: Digital assets and related derivatives may be traded on platforms that are unregulated, highly fragmented and often located outside the U.S. As a result of the lack of regulation, individuals or groups may engage in fraud or market manipulation (including using social media to promote digital assets in a way that artificially increases the price of such digital assets). Investors may be more exposed to the risk of theft, fraud and market manipulation than when investing in more traditional asset classes. Some digital asset exchangesplatforms have curtailed their activities, stopped operating or permanently shut down, and other digital asset exchangesplatforms 6 Ms. Lisa Larkin July 29, 2024 may do so in the future due to fraud, theft, disruption, technical glitches, hackers, malware or security compromises, failures in the underlying blockchain, ledger or software, or actions by governments and regulators. Although the Company does not invest directly in digital assets, events impacting the price of digital assets across all digital asset trading platforms could impact the price and market for such digital assets, and therefore the performance of the Company. Investors in digital assets may have little or no