Interview #84 : Michael Wright (Kehlet Capital)

Concentrated Microcap Investing

For this issue we have the pleasure of interviewing Michael Wright, Founder and Portfolio Manager of Kehlet Capital.

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Read the last two editions with Andrew Martin (Fairlight Capital) and Peter Smith (Palm Harbour Capital) ➡️

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Hi Michael, 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?

Sure. So, I've been fascinated with the stock market since I was a kid. I remember when I was in eighth grade and Yahoo! had their IPO. I would come home from school, log on to AOL, and find chatrooms where people talked about the stock.

However, I never considered investing as a career and instead chose to study Mechanical Engineering. After graduating college, I worked as an engineer for six years, but my affinity for investing remained. I frequently traveled to Omaha to attend Berkshire Hathaway shareholders meetings to learn from two of my favorite investors.

Eventually, I decided to go back to school to get an MBA. While there, I applied to be on the student-run MBA Investment Fund, which actively managed $14 million. Being on the fund opened a lot of doors for me. It allowed me to take investing courses that would have otherwise been unavailable.

Working on the fund gave me real-world experience managing money and evaluating companies. It also introduced me to fantastic professors, one of whom would help me land an internship as an Equity Research Analyst. The internship eventually led to a job offer.

It was a fantastic opportunity that allowed me to do what I loved - research small and microcap stocks - while learning from one of the most respected small/microcap fund managers in the industry.

But things got off to a rocky start. The fund underperformed its benchmark, my portfolio manager and I did not see eye to eye on which investments were appropriate, and my personality didn't mesh with a few people at the firm. After three years, I was fired.

At that point, I had to consider my options: 1) I could find another job, which would provide financial security but likely require some sacrificing of my investing principles, or 2) I could start my own fund, which would entail significantly more risk, but allow me to invest the way I saw fit.

Fortunately, my financial situation was good; I knew a handful of people willing to back me, and I had an amazingly supportive wife. I decided to bet on myself and start Kehlet Capital Management.