Q&A With Keith Amchin: Business Insights from a Hedge Fund Manager
Keith Amchin, the Hedge Fund Manager for Thinkshop Advisors, has over 30 years of experience in trading and investing. He graduated from the University of Wisconsin with a degree in business and became a CPA with Price Waterhouse. He then started his own accounting firm, and ultimately became an active trader. Keith now splits the majority of his time between stock research, trading and spending time with his wife and two daughters. He shares his insight into developing a successful business as an investor, and navigating the market.
When did you first start investing?
One year out of college, when I was working at Price Waterhouse, I was assigned to an audit of one of Drexel Burnham’s mutual funds. I saw how exciting investing was, and I was hooked!
You’ve been investing for over 30 years, what are your thoughts on the market? Do you find it challenging?
The market is a true reflection of society. If you think of any societal trend, there’s an investment or multiple investments that captured that trend, whether it’s smartphones and computers, healthy eating, globalization etc. Being involved in the market keeps me in tune with the big picture.
It’s definitely a challenge, and I love challenges! You get to keep score, by dollars and cents, or percentage results or relative performance against your peers. You are constantly being challenged and measured, so you need to do your homework and always be prepared. Every day is different; there are surprises, and no guarantees. The competition is exciting to me, and makes me want to work hard and do my best. It also keeps me humble because I understand that you can’t win ’em all.
How have you seen the market evolve over the years?
Bid/ask spreads have narrowed and electronic exchanges have replaced human market making specialists. Computerized trading and quantitative analysis have become daily factors in market behavior. Technical analysis of individual stocks and indexes is widespread and many market traders are trend followers for short term gain.
With one third of my portfolio I do seek out short term trading opportunities to attempt to add to total return, but I am, most of all, an old school investor who researches companies and does fundamental analysis. I’m always looking for solid businesses with long term growth stories where there is strong management and a long run societal trend in their favor.
The other major factor now is the rise of ETF’s and indexing. Market players are buying a basket of stocks thru ETF’s and indexes, and shunning individual stock picking. I feel that they are making a mistake. My analogy is that when you buy a box of strawberries there are always some bad ones in the box. I’m trying to only pick the good strawberries when I invest. An ETF or index will almost always have out of favor equities or sectors that will not perform well.
You speak very passionately about your business partners. How did you meet them?
About 15 years ago, I met my partner Alan Kaplan through our daughters who played AAU basketball together. We quickly learned that we shared a passionate interest in investing, and we developed a strong bond and lasting friendship.
Joseph Hoenigmann, our CFO, worked for Marcum LLP (CPA’s), the firm we hired to do a performance review of my prior investment partnership which used the same strategy that we employ in our hedge fund. We were impressed with Joe, and remained in contact with him. In August 2016, we were very happy to have the opportunity to hire him.
How is your team coordinated? Do you play to each other’s strengths?
Alan is a great sounding board for both my investment ideas and discussions of day to day news regarding our investments. We constantly review our investment holdings and potential new ideas, and we discuss the macro investing environment daily.
Joe, at 33 years old, brings a youthful perspective and vision that complements our strengths, and he alerts us to important millennial generation trends and investment opportunities. Being a good investor means always seeking out and being receptive to alternative ideas, and Joe regularly brings many of these to our attention. Joe’s technology savvy has greatly streamlined our operation, which has resulted in better investment resources, and more time to explore them.
What is it like being based in Long Island? Has it ever affected your ability to expand as a business?
The fact that we are based on Long Island makes us less likely to follow the big crowd of portfolio managers based in New York City. Independent ideas and thinking works in our favor. These days you can trade and invest from anywhere in the world (which I do when traveling) and I find that not following the consensus has investment merit. You want to be the first one to own a savvy investment, not the last. Lead, not follow.
Any words of advice to newcomers who want to start an investing business?
Do your homework, be prepared. I always strive to be the best prepared person of any of my peers or competitors. Love what you do. You are going to work long, hard hours so you need to really enjoy your work. It won’t feel like work if it’s a passion.
Be flexible and ready to admit when you are wrong. Everyone makes mistakes, just keep yours small. That is especially important in investing. The world is always changing, and something that was a brilliant idea one day may no longer be a shining star the next. Great business leaders have the foresight and confidence to remain flexible and manage through change and turmoil.