How much does Aitkin Investment Management actually have under management?

Aitkin Investment Management (AIM) is an interesting beast, it was only started in July last year by former stock broker Charlie Aitkin. It’s a global absolute return fund that can go long or short and trade anything from stocks to commodities or currencies.

Back in June 2015, Aitkin made the following comments regarding the amount of money that he thought AIM would be starting with based on a $150 million investment by Kerry Stokes:

Too many [funds] start without enough money and they have to punt the fund to get a performance fee to pay the school fees."

"It means I can sit here for the first few months and assess what we are going to do. I don't have to go out and play 20/20 cricket. I can get off the mark with a single. That's how you can play when you have a proper amount of capital."

Of course, it’s always possible to get out for a duck! But perhaps a bit worryingly, the article in which those comments appeared also referred to Aitkin playing around with a model portfolio:

Aitken has been running a model portfolio that he admits is a bit "like being in the cricket nets before you go out to play" but is helping to get his eye in before he heads out to bat.

I raised an eyebrow when I read this, model portfolios are usually reserved for those who have never traded real money or are experimenting with financial instruments with which they are not familiar.

Will Glasgow reported in the Australian Financial Review on 1 March 2016 that:

AIM was billed as a Kerry Stokes backed $300 million fund – or at least it was until the Stokes Family changed its mind and decided against committing $150 million to the fund last year in curious circumstances.

We are left to wonder why the $150 million was not committed, but also to ponder how much AIM raised on the back of that now non-existent $150 million in funding from Stokes and how much of that money has been retained given the withdrawal by Stokes.

At any rate the funds under management are likely to be quite small. Unfortunately for AIM, its inception also coincided perfectly with a rout in global equity markets and perhaps Charlie may be left having to "punt the fund to get a performance fee".

Charlie doesn’t come across as a modest type, on AIM's site we are told:

Charlie Aitkin, the Chief Investment Officer, has more than 22 years financial markets experience and is considered one of Australia’s leading macroeconomic forecasters and stock pickers.

He is the author of the “Ringing the Bell” newsletter and previously the “Under the Southern Cross” newsletter. He is an expert contributor to the Switzer Super Report and, previously, Alan Kohler’s Eureka Report. He appears frequently on Australian and global finanical media as an expert on Australian equities and global macroeconomic strategy.

Sitting back as a broker and picking stocks or writing for newsletters is very different to having serious skin in the game. And Aitkin will find this out very quickly.

Personally, I've never met a stock broker in my life who knew how to pick stocks (and I know I sound like the late multi-millionaire investor Charlie Viertel who said the same thing 26 years ago, but it's still truer than it’s ever been). The whole profession is somewhat of an anachronism in the 21^st century.

AIM has made two rather interesting appointments.

Firstly, Aitkin's wife Ellie is an Executive Director despite her experience in funds management being rather meager (from what is described on AIM’s web site).

It’s never a good look to put spouses or other relatives in high level positions in your own organisation and you wouldn’t think that it’s inspiring confidence in potential investors. Personally, I view such things as red flags.

The second interesting appointment is Angus Wright as Portfolio Manager.

Angus Wright was previously (amongst many roles), a Portfolio Manager who was jointly responsible for the management of the Searchlight Asia Pacific Fund (which launched in September 2010). This fund was part of the failed Mathews Capital. I raised many concerns regarding Mathews Capital prior to its collapse (you can read that article here).

Once again, without casting any aspersions on anyone, in terms of market perception, a former Portfolio Manager for a failed outfit may not be the savviest pick for a brand new organisation. Good traders who worked previously at failed organisations are fine for established players who have a sound record behind them and plenty of funds under management, but it’s a more risky pick at a new fund with no runs on the board (to continue Aitkin’s endless cricket metaphors).

It will be very interesting watching how this self-appointed "leading stock picker" performs.