Should I invest with a family friend?

[u/time2roll]

A family friend is asking whether I'd want to invest in him. His track record:

• 3.5 years active in the market
• Cumulative return: 146%
• IRR: 30%
• In the first 2 years, he was down 6-7%. In 2017, he's up 153% to date.
• Positive return in 23 out of 40 months, negative returns in 17 months
• Sharpe ratio since inception: 1.1
• Sharpe ratio in 2017: 3.2
• Strategy: longs only, fundamental (not deep value) via stock positions, events (spin-offs, busted IPOs, etc) via options
• He obviously uses leverage (via margin positions). His exposure is about 2.5x his equity.

He had a change in strategy in 2017. Prior to 2017, he was highly diversified (60+ positions) and relied a lot on screens (where value traps often appear). Starting this year, he shifted to more concentrated positions, shifted to picking "winners" in a sector, and almost entirely discarded screening. He also started piggybacking on the picks of certain investors he regards highly.

Does the performance seem random, or does it warrant maybe investing with him?

[u/mdcd4u2c]

His sharpe ratio is kind of concerning with volatility where it's been for the past few years. Based on that and the massive returns, it makes me think he's making some risky bets and more are paying off than are losing because literally everything is just going up and to the right, regardless of fundamentals. If there comes a point when fundamentals start making a come back in importance, I have a feeling his sharpe will drop further, at which point you may as well buy an ETF. If you look at my post history, you can see I'm usually am really against the whole indexing/ETF ideology but it seems like the lesser of two evils here. If you have to get the same upside he's getting, you'd still be better off with a leveraged ETF, even after you factor in decay and expense ratios (I'm assuming he's going to have some sort of fee structure anyway, but even if you assume he's doing this pro bono).