Interview #88 : David Bastian (Kingdom Capital Advisors)
Interview #88 : David Bastian (Kingdom Capital Advisors)
Dislocations between price and intrinsic value
For this issue we have the pleasure of interviewing David Bastian from Kingdom Capital Advisors, a Registered Investment Advisor located in Fairfax, Virginia.
Using separately-managed accounts, KCA provides investors access to its actively-managed portfolio of small-cap and micro-cap equities.
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Hi David, 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?
Thanks for having me Jon.
I attended Penn State University and studied to be an actuary, but I was more interested in the stock market than calculating pension benefits. I took an M&A advisory job at PwC where I learned more about investing from some of the best PE shops in the country.
I started personally applying similar investing principles to small cap public equities, with good success. Publishing ideas to Seeking Alpha allowed me to build a public record and improve my investment process. That platform opened doors to like-minded investors that have helped me grow.
I grew my personal investments quickly, which provided the freedom to leave my job and start Kingdom Capital Advisors. I wanted to create a vehicle to invest money on behalf of friends and family, with the hope of duplicating my earlier success.
I knew I would need to be in the “driver’s seat.” Concentrated portfolios of small-cap equities invite volatility, and I’ve never seen people successfully borrow someone else’s conviction.
So, I launched KCA with a small pool of investments from friends and family members. Mike and I have been fortunate to grow the firm over the past two years, and our mission remains to steward our clients' investments as we do our own.
What has it been like trying to raise capital over the past few years?
Do you see a growing interest from high-net worth individuals, family offices, and pension funds etc. to invest in a small cap focused public equities funds such as yours?
It has been harder than I expected, given the significant outperformance we’ve posted to date.
Small caps aren’t exactly “en vogue,” so people often glaze over quickly when they realize you own zero Nvidia but a lot of coal, auto OEMs, and office lessors. But then again, returns at Alpha Met dwarf Nvidia the past couple of years.
That said, we’ve had a steady stream of interest from outside our circle, and our pipeline continues to grow as our process is galvanized.
We all want patient capital, so the organic growth has proven beneficial, but we were initially naïve enough to believe a few quarters of strong returns was all we needed.