Steven Kiel
- Steven Kiel - the self-made founder and portfolio manager at Arquitos Capital - says a few classic investing books helped shape his value-focused, hyper-concentrated philosophy.
- Since Arquitos' inception in 2012, Kiel has been trouncing the overall market by over 6% annually.
- He also explains how the sequential order in which an investor reads is just as important as the material.
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Steven Kiel, founder and portfolio manager at Arquitos Capital, took anything but the conventional route to become a multi-million-dollar hedge fund manager.
In fact, he was a soldier and attorney for a number of years before he took his investing hobby to the next level.
But that unorthodox path hasn't stopped him from rewarding investors with market-trouncing returns. Since 2012, he's achieved net annualized returns of 19.7%, with his most recent performance tipping the scales at 26.1%. Over that same time period, the S&P 500's performance pales in comparison, with a roughly 13% annualized return.
Along Kiel's road to hedge fund founder and manager, he was able to develop his investment strategy through the application of a few key books. He took bits and pieces of information from the greats: Warren Buffett, Joel Greenblatt, Seth Klarman, Charlie Munger, Ben Graham - and wound up with a highly concentrated, valued-focused approach.
In an exclusive interview with Business Insider, Kiel relayed how these books transformed his life and investment strategy.
"I think you really have to start on businesses and biographies and things like that," he said.
For Kiel, the book that started it all was "Buffett: The Making of an American Capitalist."
"That crystalized an appreciation for him," he said.
The tale describes Buffett's path to becoming the world's most famous and renowned investor. It's a story of true entrepreneurship, curiosity, and determination. Today, the Oracle of Omaha's net worth sits around a stratospheric $80 billion, so it's safe to say that Kiel started his quest in the right place.
But he was just getting started - and after he had a solid understanding of business firmly in place, he moved onto "Margin of Safety" by Seth Klarman and "You Can be a Stock Market Genius" by Joel Greenblatt - two books that were paramount in shaping his investment philosophy. These works "put it all together."
"By the time I got to 'Margin of Safety' to read, I was ready for it," he said. "If I were to have read that first, I would not really have appreciated the tactics that he writes about."
Kiel makes an important point here - one that is often overlooked. The order in which an investor reads is paramount. Trying to read an advanced investment book without a solid foundation of understanding can be overwhelming. There's just too much information, and much of it passes you by.
"You do have to be careful about what order you read things in because you don't appreciate them," Kiel said. "If you have no basis or background of what business is, then you're not really going to get it."
He concluded: "Same thing with 'You can be a Stock Market Genius.' There's 50 different ways to profit from that book."