Clime

Another pair of fabulous twins today - Clime Capital (CAM.AX) and Clime Investment Management (CIW.AX). Clime Capital is the closed-end fund and Clime Investment Management the management company. CAM is a long-only stock fund. The manager, Roger Montgomery, worships Warren Buffett and has been achieving Buffettoid results. My annualized rate of return is 54% (in Australian Dollar terms). I met Roger Montgomery when he gave a presentation at the Securities Institute in Sydney. After that I followed what he did and found that he had floated this closed end fund. Initially, the fund was mainly in cash as he looked for good investment opportunities and I didn't buy shares till the fund was mostly invested in February 2006. I doubled my holding in September 2006 when there was a steep sell-off relative to net asset value as the infamous David Tweed tried to unload his holdings. I am looking to double my holding again when there is a good opportunity. This is one of the big advantages of investing in closed-end funds over open-ended mutual funds. Sometimes they are on sale at a steep discount. Montgomery's main strategy is similar to Buffett's and he is also not afraid to hold large positions in small companies. Some of the money though is also invested into the cheapest big cap Australian stocks on a systematic basis. Seems that he likes to play with various capital raising strategies, the latest being converting preference shares.

I first became aware of CIW.AX when they took a stake in Clime Asset Management which was the unlisted management company that managed CAM. At that point CIW was known as Loftus Capital Partners and was a closed end fund that took stakes in both listed and unlisted companies. Since then CIW has acquired the rest of Clime Asset Management and changed its name and strategy to become a broad based financial management company that will acquire other management companies (and it also has a substantial investment in CAM). Essentially, it is an embryonic Australian version of AMG. Its P/E is 17 and given the growth potential I think the shares are cheap. My annualized rate of return is 43%. All the founders including Montgomery now have large stakes in CIW as well as shares in CAM.