If you are looking for an investor to add to your watchlist in order to identify interesting stocks to invest in, then Arquitos Capital Management should definitely be among your top choices. Arquitos was founded in 2009 by Steven L. Kiel, a graduate of the Illinois State University, and in the last couple of years it is killing in terms of returns. In a period when stock markets are at all-time highs and many hedge funds are lagging the broader indexes, Arquitos stands ahead of the crowd as it returned 64% in 2017 (net of fees) and 55% in 2016. Since its inception in April 2012, Arquitos’ annualized net returns stand at 34.5%.
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Arquitos Capital Management is one of the funds that is worth following based on its past returns. However, because of its small size, the fund doesn’t file a quarterly 13F filing, so we can identify its stock picks only through quarterly letters. A value-oriented fund Arquitos doesn’t invest in mainstream companies or household names. According to its fourth-quarter letter, the only well-known company that Mr. Kiel’s fund holds is Bank of America Corp (NYSE:BAC) and it doesn’t own shares but warrants that were issued under the Troubled Asset Relief Program, which are due later this year and at the beginning of 2019.
Arquitos other investments are less known and much smaller companies, some of which generated huge returns last year. For example, in June, the fund invested in BOSTON OMAHA Corp (NASDAQ:BOMN), an advertising, real estate and insurance company, after it got listed on NASDAQ. In the following six months, BOSTON OMAHA Corp (NASDAQ:BOMN)’s stock surged by 150%. One of the company’s co-chairs and co-CEOs is Alex Rozek, who, incidentally, is the grandson of billionaire Warren Buffett‘s sister and it is likely that some of the stock’s growth can be attributed to this fact, although Mr. Kiel didn’t mention the relation to The Oracle in the letter, but said that both BOSTON OMAHA Corp (NASDAQ:BOMN)’s co-CEOs Alex Rozek and Adam Peterson are talented capital allocators and “it is fun watching them build a sustainable platform.”
Among the investors in our database only a handful invested in BOSTON OMAHA Corp (NASDAQ:BOMN), with Adam Peterson‘s Magnolia Capital Fund being the largest institutional shareholder in the company. Magnolia reported holding a $104.63 position in the company at the end of September.
On the next page, we are going to discuss two other investments of Mr. Kiel, including one company that the manager of Arquitos believes to represent a great opportunity this year.