CAM – Clime Capital | Aussie Stock Forums

In response to the original question, I think Clime is worth buying at these prices if only because they’re so far below NTA, but that doesn’t mean it’s my, let alone your, best buy.

My take on the CCP pain is a bit different, and it’ll be interesting to see what lesson Montgomery & co. draw from it as time goes on. Dhukka has said that he thinks they didn’t really understand the business and that they didn’t value the ledgers properly. He may well be right about that, but the bright red flag for me was CCP management’s explanation of the first downgrade. Remember they said that they were putting on masses of new staff and they’d underestimated the time to train them. That seemed to me like a very serious mistake to me, at least as serious as a financial stuff-up. If senior management was that wrong about how long their people needed to learn how to generate projected income, then senior management didn’t understand what their people really do and how many ways there might be to do it. For a business that relies wholly on its staff, that’s a huge problem. The Clime guys did talk about the staff in some of their commentary: I remember a remark that CCP was the company of choice to work in. I hope they’ll be a bit more skeptical about management’s views in the future.

On StockVal and CCP, I could have incorporated that sort of soft data into StockVal by lifting the required return to take account of the risk that I perceived (I didn’t, but I was never looking at buying it myself). I think that risk as shown in StockVal is a very loose guide, incorporating anything from stock liquidity to debt level to the perceived quality of the board to whatever. I guess it’s more an indication of the amount of digging you should do before buying than anything else.

The CCP thing has shaken my confidence in Clime, but I’m encouraged that they seem to be continuing to follow the strategy they always said they would. As a shareholder, I want them to pick up the dropped stitches and keep knitting, not start doing crochet instead. That means I don’t want them to diversify and I don’t want them to start chasing price action. I want them to keep looking for good companies that will increase in value over time.

Hopefully without too many more mistakes.

Cheers

Ghoti