Professor Michael Malouf Interview
November 11, 2024
Biography: Mike Malouf received his BS in Finance from Arizona State University. Out of college, he was an Analyst at a liquidity fund for about a year and a half before he started working at RCM. He moved his way up from being the assistant of an assistant to working as a Portfolio Manager, where he was in charge of $1 billion. Throughout his career, he primarily worked for micro and small-cap companies. He is currently in the Investment Banking Industry as a Managing Director for the Benchmark Company. He has been a professor at Bentley University for seven years, teaching equity research.
Interview Q&A: 
Can you give us a rundown of your career experiences?
I started at a company called RCM Capital, a large money manager on the West Coast. I started working there as an assistant to the assistant, which involved making copies and files. I got a break when one of the associates left, and I was able to take over that role within six months. My mentor, the analyst who I worked for, ended up becoming a Portfolio Manager so I became his assistant portfolio manager within about a year. Within two years, he decided to retire, and there was no one to step into his role, so at 25 I started managing about $1 billion of small-cap growth assets for institutional clients. This was a great opportunity for me, and I had the best performance while I was there for three years working as a money manager. I was recruited by a company called Neuberger Berman out of New York, and they wanted me to run their go-go fund in the ‘90s. That’s how I got to Boston. I managed the newly launched Millennium Fund, which was a retail fund and institutional fund. Over about a year and a half, we raised about $1 billion. In 2002, the growth team closed in Boston, so I ended up starting up my own fund with my friends ,and it grew to about $3.2 billion over five years. It was all institutionally focused and had clients from all over. I did that until 2008, and then I ended up taking some time off and joined a firm called Craig Hallum to start up their micro-cap product. I became a sell-side analyst for about 10 years. Once the pandemic hit, I took some time off but recently joined a firm called Benchmark, where I am on the Investment Banking side.
Going into and coming out of ASU did you have an idea of what you wanted to do in finance?
I knew I always wanted to work in the market, I just didn’t know exactly what it was. I had an interest in stocks and taught three or four weeks of my personal finance class in high school. I always just had this interest in my bones and wanted that to be something I would pursue. When I got out of college, I got the break to become the assistant of the assistant, and I just ran with it. At the time, they wanted all their analysts to get their CFA. So, I got my CFA and passed Level 3, so I didn’t need to go back and get my MBA given I had that.
Becoming an Analyst at a liquidity fund, what did you do? And why was there a quick transition to RCM Capital?
I was at the liquidity firm for about a year and that’s where my career began as an analyst. I ended up meeting some people at RCM which opened me to that opportunity. To take the job at RCM as an assistant to the assistant, I had to take a pay cut even with one and a half years of experience out of school. In hindsight, it was the best decision I have ever made, but it is always hard to take a step back or take a step sideways. I think when you are in your 20s, you can do things that you wouldn’t do in your 30s or 40s. It was the role of a lifetime as you can see how it worked out.
Being so young how did you handle that? Do you have any advice for someone who would want to get into an analyst position today at a buy-side firm or sell-side firm?
They are definitely different. As a buy-side, you have to come at it with a little bit of an angle of “how do we make money” and “out-perform” the market. The first thing we need to understand is the benchmark. Everyone on the buy-side has a benchmark that they are competing against, and it is important to know what that benchmark is as an analyst and how you can help the portfolio manager to outperform the benchmark. What that means is underrating the components of it; if you are looking at the S&P 500 and you have 6% of your portfolio in Apple you are neutral Apple, but if you only own 3% then you are short Apple, and if you own 10% then you’re bullish on Apple. You have to understand the position and help the portfolio manager with those types of decisions. I think not trying to know everything about a stock is important, but you do have to know what is important for the market. On the sell-side, it is a lot different. You do have to know everything. You must be very deep in the companies you follow. You will also be tasked with selling your ideas. If you’re not getting people to act, then you are not being persuasive. It isn’t an effective report if you can’t get someone excited about your idea on the buy-side or the sell-side.
Being so young, how did you handle being in charge of so much money at Neuberger Berman?
When you start to get into that type of money you start to become numb to zeros. It is just the difference between one zero and three zeros, it just becomes more of a task than more of the realization of how much money you are managing. With small caps, you end up owning a significant number of shares in the company, which I think was probably the biggest transition I had to make. When you buy or sell you will have a big impact on the stock which is something you have to become comfortable with.
At RCM, did you specialize in anything as an analyst or PM that helped you grow into starting the Millennium fund at Neuberger Berman?
It was a different role because at RCM it was all institutions where I was pitching to the board. It was so different at Neuberger Berman because it is a retail-focused fund where we ended up focusing on institutions as well. The first part was all retail, so you had to get comfortable talking to 2,000 reps at Fidelity, which I did several times. I had to get comfortable going on TV and doing presentations to thousands of people, which was a big change.
You have a large amount of experience (Neuberger Berman, Copper Rock Capital) as a Portfolio Manager, is there any advice you would give to someone wanting to end up in that position?
You first must start off being a good analyst and see why stocks go up and down. But more so being able to look at a company and quickly see what the key points are. Once you get to that point, you will understand what portfolio management is all about because really what you are doing is putting together a significant number of those types of varying opinions that will hopefully outperform the market.
Why small caps, what's the edge that you feel you have in small caps?
My mentor was a small-cap portfolio manager, so when he left it was just natural to take over. It was something that I liked; going with small emerging companies that were on the verge of big growth potential. All big companies were small at some point, so understanding where they were in their lifecycle, what things can go wrong/right, and evaluating both of those relative to the opportunity of each of the companies was fun to me and it still is.
Craig Hallum was the longest position of your career, what was your main line of work that you did for them?
I was there almost ten tears. I started the Alpha Select Group, which is a product that specifically highlighted micro-cap stocks. I liked small cap companies, and they needed our help with convenance, advice, and raising capital. All those types of things we could help them and provide them with. It is nice to create a product and niche that is needed which adds a lot of value. I enjoyed that for a long time. I started up our Boston office, so that took a lot of work. We hired a banker, a couple of salespeople, a few analysts, and a few associates.
Now you work as an MD at The Benchmark Company in Boston, how does this job tie up your other lines of work, and for someone looking to get to that MD spot what would be your advice for them?
I came into Investment Banking differently than most people. I think that for me it was a nice fit. I had buy-side and sell-side experience and I had been talking to company management teams for a long time, so I got to see what they needed. I can add advice to these companies where others can’t because they don’t have the experience I do.
Two interesting unique things on your LinkedIn were Co – Founder of Thermal Brands and Co-owner of two restaurants in Hawaii, why take these projects under your hands and what are these about?
A friend of mine and I started Thermal Brands which is more of a brand enhancement company. It was a lot of fun and [some change]. With the restaurants, I always liked investing and being part of something. I had some friends who started a restaurant that I invested in and eventually ended up selling. I had a really good experience with it and one of the guys that I knew very well wanted to open a restaurant in Hawaii. A few years later he found the perfect spot, and we opened it up together, and it did well. Now we have three restaurants in Hawaii. It has been fun to be a part of these things.
Why come back and teach at Bentley?
I always respected Bentley. I met a lot of Bentley alumni through my time working in Boston. I was invited to be a guest speaker to talk about equity research and I enjoyed it. Eventually, I got a spot to teach this class, and I am now going into my eighth year of teaching it. I love to talk to students and help them understand real-world experiences and get them interested in equity research.
Why teach your equity research class in the untraditional manner the way you do?
One of the things I have learned from teaching this class is students at Bentley have a lot of fundamental knowledge. They have a good concept of things but putting it into real-world context is another story. How to predict the future and understand the drivers is something students never experience in class. You can take what you learn in class and apply it in the real world but understanding capital structure in and of itself gives you an advantage over graduate students who think they understand but really don’t.
Out of the students that have succeeded in your class what are some of the characteristics they have in common?
The successful students all participate in the class. These students sometimes know the products I am dealing with, and some don’t, but they all participate. It is those students who do the best. They have the self-confidence to learn. If you have the desire to learn and be curious, you will be able to do good things. Asking questions and learning will help with your growth.
What's a piece of advice you have for students entering Bentley? And graduating Bentley?
To students entering Bentley, get to know your professors. Be as active in the classroom as you possibly can be. You are at school to learn and get an edge over other individuals. It is up to you to take advantage of all the opportunities Bentley has to offer. For graduated students, I would say don’t think that your first job is your end all be all. Learn as much as you can and be open to opportunities. If you made a mistake or think you made a mistake, pivot. The quicker you can get out of the bad situation the better.
Favorite part of being a professor?
I love at the end of the semester when students tell me they learned a lot and got something out of the class. Also, when students come in not knowing what to expect, but at the end say how the class has opened their eyes.
None of the information provided by Mr. Malouf, herein constitutes a recommendation, solicitation or offer by The Benchmark Company, LLC. or its affiliates to buy or sell any securities, futures, options, or other financial instruments or provide any investment advice or service.
The statements or opinions expressed herein reflect Mr. Malouf’s personal views and are not the opinion of The Benchmark Company, LLC or any of its affiliates.