Professor Rich Thompson Interview

Biography: Richard Thompson graduated from Bentley University in 1991 with a degree in finance. During his time at Bentley, he worked for a company called Wall Street Games which was a fictional stock market simulation, and he also ran a t-shirt business on campus. When he graduated, he became employed at a small hedge fund, Manchester Growth Fund (a $100m AUM hedge fund), where he started as an equity analyst.  

Five years later he moved to become a Research Associate at Fidelity and then was promoted to Research Analyst, and he eventually became a Portfolio Manager on the small-cap team at the London Office. He then returned to Boston where he picked up a domestic small-cap fund and ran that for almost eight years before he joined the managing team as a Managing Director of Research. In this position, he managed the small cap team, consumer team, technology team, and research associates. 

Interview Q&A: 

Did you know right out of college that you wanted to go into stock picking as your career? 

I knew that I wanted to go into stocks because I thought the stock market was appealing. I watched a program on PBS called Wall Street Week with Louis Rukeyser, where they would interview fund managers. This greatly interested me throughout high school.  

Coming from Bentley, how did college help you when you got thrown into the real world? 

I had the toolkit I needed to be successful, and I understood the mechanics of how stocks worked. From there I was able to figure everything else out. Through Bentley’s career services, I landed a job at Manchester Growth Fund which was a small hedge fund.  

Was this also where your love for small caps began? 

Yes, I liked the full access to the small-cap teams. You could get to understand everything since it is on a much smaller scale. Also, with small companies, there is less competition in terms of research. For those reasons, it was a better fit for me.  

Out of college and into an equity analyst position, how did this allow you to eventually join Fidelity? 

At Manchester Growth Fund, I learned the relevant skills to be ready for the Fidelity interview.  

What decisions led you from going to Manchester to FMR and why did you cover the tech, energy, healthcare, and consumer sectors when there? 

Since the Hedge Fund was a one-man shop, I was looking for a broader experience as an investor. I wanted to get a sense of the more general, more traditional way of making money in the stock market. I wanted to learn from more people, and Fidelity had individuals doing all different styles and approaches as well as different personalities which was attractive. I was assigned to these sectors based on where help was needed; there was no personal input. I liked this because they were all learning experiences.  

Was there anything that jumped out to you when covering those sectors that helped you as a portfolio manager? 

Regardless of the sector, there are winners and losers in everything. You never know what the path will be, so you must have a pragmatic approach. It is important to leave out emotions, biases, and egos when it comes to investing. Take your best shot with the information you have, and then make use of any new information that comes out. 

Is this where your process for stock picking and probability-weighted price targets picked up? 

At Fidelity, I had the opportunity to experiment with these processes. I would make mistakes and would have to live with the consequences, but I was ultimately able to take away key learnings. Even based on historical information, nothing is ever for certain, so you learn these things and piece them together on your own. When you want to have an effective pitch, you must set up an expected return and, thus, a price target. To have that price target, you must put things together that are repeatable and have structure.  

When you got the call to move to the London office, was this one of the bigger risks that you took in your career and, how did this come about?  

I don’t look at anything as a risk. I got the promotion and took advantage of it. At Fidelity, you must interview for all roles and promotions. I had the opportunity to interview for this job and ended up getting it. It was my first time running money for Fidelity which is something I was in pursuit of. This was also my first role as a portfolio manager; I oversaw a UK small-cap fund.  

 What is the biggest thing you learned from the first portfolio manager spot? 

I got to work with Anthony Bolton who is considered the Peter Lynch of Europe. I worked closely with Anthony, and he taught me valuable information. Anthony liked small caps, too, so we would talk about that together. I tried to take pearls of wisdom from him. Learning and teaching must go both ways, which was shown in our relationship. 

 Eventually, you moved back to Boston to assume the role of US equity and Small Cap Portfolio Manager, almost 30xing your AUM that you managed. Did your mindset ever change during this move and what was the most interesting part of this move?  

The mindset doesn’t change because the dollar amount doesn’t make a difference. Your bet sizing is your bet sizing. You must stay in the percent of fund mentality, not the dollar amount. The responsibility of those working at Fidelity is to serve those who have trusted you with their money; that is why they are there. The goal is to serve the clients well through performance.  

Any nauseous moments during the 2008 financial crisis? 

Being nauseous won’t help you make good decisions, so I try to remain rational. You think about your investor, but also structurally, you understand the market will come back. There is an adage about the market and how it can stay irrational longer than you can stay solvent. In the asset management group, they prided themselves on not doing layoffs during the market declines; they always played the long game. In late 2008, Peter Lynch, Joel, and Bruce Johnstone did a panel about the opportunities out there. They showed how this is an opportunity for investors during a time of crisis. It is important not to get emotionally distracted about who might become unemployed, which wasn’t a fun task. I tried to stay calm and aimed to keep making those rational decisions.  

What is something you’re most proud of in your Fidelity career?  

You can’t worry about something you don’t have any control over. I get to teach people things that I have learned, and then those people interpret that information differently, which they then pass on to others and so forth. There is no pride, just hard work. I seek contentment and an intellectual challenge, which is what I got at Fidelity. 

Being named Managing Director of Research for the Small Cap tech and consumers team, what was your role here, and did you move away from stock picking?   

I moved away from directly running a fund and picking stocks which was initially weird. With that being said, I embrace the idea of what else I can do to contribute to the organization. Fidelity asked for help, and I was happy to help to the best of my ability.  

How has teaching at Bentley changed your career perspectives and why come back and teach your class at Bentley?  

I always enjoyed campus visits. I love the naivety that the youth have. When you are starting there is much less risk, which is an environment I like rather than the cautionary take. At Fidelity, I was always a part of the recruiting team and was able to visit with college students. It was a great opportunity for me to come up with creative approaches to pass along information. 

Favorite part of being a professor. 

I enjoyed having relationships with the students who care about the topics. I like to keep in contact with these types of students because it pushes them to figure out the puzzle pieces on their own, but I am there to help reconcile these problems which I find satisfying. The most satisfying part is when students get into their careers, and I get to talk about stocks with these prior students. I also get to learn from students about things they are following, for instance, Celsius. “It keeps you fresh.” 

Out of the students that have succeeded in your class, what are some of the characteristics they have in common?  

There is the intellectual part that must be there, but also the curiosity feature, and then focused curiosity. Also, being curious with a purpose. The gears must be aligned for the machine to work. Someone who embraces the idea that there will never be an answer and that it is an infinite game. People are always looking for an answer, but I am just trying to be correct, not find an answer which isn’t an easy task. I like the students who put forth a genuine effort to continue refining their processes.  

What's a piece of advice you have for students entering Bentley? And graduating Bentley?  

Be open to all different possibilities. Explore a journey of introspection to get to know who you are as an individual. This isn’t easy, but you must be comfortable with who you are. Through this journey, that is the only way you can have a genuine relationship with your life. Rather than being a derivative of other people’s interests, it is important to have genuine pursuits of your core. It is important to pursue your passions, but there needs to be a practical element. The sooner you find out who you are, what resonates with you, and what you want to pursue, then the more successful you will be.