Interview #100 : Luke Winchester (Merewether Capital)
Interview #100 : Luke Winchester (Merewether Capital)
Exploring Aussie microcaps
For this issue we have the pleasure of interviewing Luke Winchester from Merewether Capital.
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Hi Luke, thanks so much for taking the time out to do this interview.
Can you please tell readers about your background, and how you got involved in investing?
I originally worked in industrial relations after obtaining a Business degree, working for an employer association helping members with union negotiations, unfair dismissals, pay disputes and other issues.
Despite being young at the time, it was an eye-opening experience to how business worked in the real world, especially seeing how difficult it was to manage the interests of various stakeholders.
Like many Aussies my introduction to investing came from speculative mining companies! Between 2010-2013 there was a huge mining boom in Australia on the back of Chinese fiscal stimulus, and combined with depressed share prices post-GFC it saw a lot of miners and services companies have their share prices increase by many multiples.
Chasing quick riches, I bought minimum parcels of shares in a couple of hot tips which subsequently blew up as the mining boom unwound. Undeterred, I had caught the investing bug but quickly realised I was fishing in the wrong ponds and found communities of private investors online who were investing and sharing research on quality ASX micro and small caps.
Finding these undiscovered and under-researched gems resonated with me, and I spent the next few years posting research in these communities and building a network of like-minded investors to bounce ideas around with.
I was then fortunate enough to land an entry-level analyst role with Oracle Investment Management and spent five years there learning and working my way up to Portfolio Manager of their Emerging Companies strategy.
In 2021 I was approached by ARC Funds with a proposal to be an equity partner for the launch of a newly established investment manager. That was Merewether Capital, with the Inception Fund reflecting my passion for undiscovered and under-researched businesses with a focus on ASX micro and small caps.
Can you provide an overview of Merewether Capital?
Merewether Capital is a boutique fund manager, we run the single strategy right now with the Inception Fund. As I outlined before I have the involvement of ARC Funds as a partner and they are a huge benefit to me as they handle the back-end administration, licensing and other red tape that often gets in the way of small managers from doing what they do best, researching businesses and finding investment ideas.
The Inception Fund has been running now for nearly three years and while it's been a tough start to the Fund given the prevailing conditions for my preferred area of the market, nonetheless we have survived and things appear to be turning.
The Fund is still small (~$4 million FUM) but it is a benefit for our investing style given we're not constrained by size or liquidity for the micro and small cap stocks in our universe.
What type of businesses or situations do you like to invest in?
I really resonate with businesses that are misunderstood by the market. To be more specific, I try to find investments where I believe the underlying quality of the business is better than what the market valuation implies it to be.