Securities and Exchange Commission
Washington, D.C. 20549
-------------------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Clemente Global Growth Fund, Inc.
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(Name of Issuer)
Common Stock, par value $.001 per share
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(Title of Class of Securities)
18556910
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(CUSIP Number)
Ralph W. Bradshaw
c/o Deep Discount Advisors, Inc.
One West Pack Square, Suite 777
Asheville, NC 28801
(828) 255-4833
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 14, 1998
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(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
<PAGE>
CUSIP No.: 18556910 13D Page 2
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. ID NO. OF ABOVE PERSON
Deep Discount Advisors, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER (a) [ ]
OF A GROUP (b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL [ ]
PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
One West Pack Square, Suite 777 Asheville, NC 28801
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NUMBER OF | | SOLE VOTING POWER
SHARES | 7 | 776,053
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BENEFICIALLY | | SHARED VOTING POWER 0
OWNED | 8 |
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BY EACH | | SOLE DISPOSITIVE POWER 776,053
REPORTING | 9 |
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PERSON | | SHARED DISPOSITIVE POWER 0
WITH | 10 |
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 776,053
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW [ ]
(11) EXCLUDES CERTAIN SHARES
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13 PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) 13.2%
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14 TYPE OF REPORTING PERSON IA
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<PAGE>
CUSIP No.: 18556910 13D Page 3
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. ID NO. OF ABOVE PERSON
Ron Olin Investment Management Company
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2 CHECK THE APPROPRIATE BOX IF A MEMBER (a) [ ]
OF A GROUP (b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL [ ]
PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
One West Pack Square, Suite 777 Asheville, NC 28801
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NUMBER OF | | SOLE VOTING POWER
SHARES | 7 | 383,500
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BENEFICIALLY | | SHARED VOTING POWER 0
OWNED | 8 |
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BY EACH | | SOLE DISPOSITIVE POWER 383,500
REPORTING | 9 |
=====================================================================
PERSON | | SHARED DISPOSITIVE POWER 0
WITH | 10 |
======================================================================
11 AGGREGATE AMOUNT BENEFICIALLY OWNED
BY EACH REPORTING PERSON 383,500
=====================================================================
12 CHECK IF THE AGGREGATE AMOUNT IN ROW [ ]
(11) EXCLUDES CERTAIN SHARES
=========================================================================
13 PERCENT OF CLASS REPRESENTED BY
AMOUNT IN ROW (11) 6.5%
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14 TYPE OF REPORTING PERSON IA
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<PAGE>
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the shares of Common Stock of
Clemente Global Growth Fund, Inc (the "Issuer"). The principal executive
offices of the Fund are located at 152 W. 57th Street, New York, NY 10019
Lilia C. Clemente, Chairman
Leopoldo M. Clemente, Jr., President
Thomas J. Prapas, Treasurer
William H. Bohnett, Secretary
ITEM 2. IDENTITY AND BACKGROUND
(a) - (c) This Schedule 13D is being filed by Deep Discount Advisors, Inc.
and Ron Olin Investment Management Company (the "Reporting Persons"),
who are Registered Investment Advisors, One West Pack Square, Suite 777,
Asheville, NC 28801. Further information is attached in Exhibit A.
(d) None
(e) None
(f) USA
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Investment funds
ITEM 4. PURPOSE OF TRANSACTION
The acquisition of the securities of the issuer was made for the purpose of
investment. The reporting persons may acquire additional securities, or dispose
of the securities of the issuer from time to time.
The reporting persons are in favor of actions by the issuer which would have the
effect of increasing the investment value of the issuer's shares, and will
support actions which, in the sole discretion of the reporting persons, may
result in an increase in the market value of the issuer's shares.
On July 22, 1998, Ronald G. Olin, a control person associated with the reporting
persons and also an individual shareholder of the issuer, is scheduled to meet
with the Board of Directors of the issuer. In preparation for that meeting,
Olin has sent a letter to the Board documenting the disappointing long-term
performance of the issuer, and suggesting actions which might be taken to
increase shareholder results by reducing or eliminating the discount at which
the shares of the issuer have traded. The actions suggested include a program
of perpetual, maximum share buybacks by the issuer of its own shares and/or
splitting the issuer into different closed-end and open-end funds to satisfy the
needs of different shareholders. A copy of the letter sent by Mr. Olin is
attached as an exhibit to this filing.
The Board of the issuer has not taken a position on any of these suggestions,
and there can be no assurance that the Board will agree to any of these actions
or any other actions that will result in eliminating the discount.
This Schedule D filing, in lieu of the reporting persons' normal filing of
Schedule G, is occasioned solely by the reporting persons' extraordinary
communications with the Board as they relate to eliminating the discount at
which the issuer's shares trade in the market. The securities of the issuer
acquired and held by the reporting persons were acquired in the ordinary course
of business and were not acquired for the purpose of and, except as described
herein, do not have the effect of changing or influencing the control of the
issuer of such securities and were not acquired in connection with or as a
participant in any transaction having such purposes or effect.
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) The Fund's quarterly report, dated May 15,1998,
states that, as of the close of business on March 31, 1998, there were
5,892,400 shares of Common Stock outstanding. The percentage set forth
in this Item 5(a) was derived using such number.
The Reporting Persons are the beneficial owners of 1,159,553
shares of Common Stock, which constitute approximately 19.7% of the outstanding
shares of Common Stock.
(b) Power to vote and to dispose of the securities resides
with the Advisors.
(c) During the last sixty days, the following shares
of Common Stock were traded:
Date Number of Shares Price Per Share
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6/22/98 2800 bought 11.375
6/19/98 1300 bought 11.3606
6/18/98 5000 bought 11.375
6/17/98 4000 bought 11.3125
6/16/98 5200 sold 11.125
6/12/98 2500 sold 11.695
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
None
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The letter from Mr. Olin to the Fund, which precipitates this filing, is
attached as Exhibit 1.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: July 17,1998 Deep Discount Advisors, Inc.
By: /s/ Ralph W. Bradshaw
----------------------------
Name: Ralph W. Bradshaw
Title: Secretary
<PAGE>
EXHIBIT A
The business address for all individuals listed
in this Exhibit A is One West Pack Square, Suite 777,
Asheville, NC 28801.
DIRECTORS AND/OR GENERAL PARTNERS
Name and Address Principal Occupation
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Ronald G. Olin Investment Advisor
Sandra D. Olin Director
Gary A. Bentz Investment Advisor
Ralph W. Bradshaw Investment Advisor
William A. Clark Investment Advisor
Ralph D. McBride Attorney
<PAGE>
EXECUTIVE OFFICERS
Name and Address Principal Occupation
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Ronald G. Olin Investment Advisor
Gary A. Bentz Investment Advisor
Ralph W. Bradshaw Investment Advisor
William A. Clark Investment Advisor
SHAREHOLDERS WHO MAY BE DEEMED TO CONTROL THE ADVISORS.
The following shareholders and/or partners may be deemed to
control the Advisors:
Ronald G. Olin
EXHIBIT 1
DEEP DISCOUNT ADVISORS INC.
Enhanced Performance through Closed-End Fund Investments
One West Pack Square, Suite 777, Asheville, NC 28801
828-274-1863 Fax: 828-255-4834 E-mail: [email protected]
Lilia C. Clemente, Chairman and Director Ph: 212-765-0700 Fax: 212-765-1939
The Board of Directors, Clemente Global Growth Fund, Inc.
Clemente Capital Inc.
152 W. 57th Street,
New York, NY 10019
(via both Fax and Federal Express) July 14, 1998
To the Board of Directors of Clemente Global Growth Fund:
I am pleased to be invited to meet with the Board on July 22, 1998. The purpose
of this letter is to provide some background to the Board in advance of that
meeting and to suggest some remedies for both the discount and the long-term
performance issues which are the source of contention between the Fund and many
of its shareholders. I am hopeful that advance consideration of this material
will make our meeting very productive.
My clients and I currently own about 20% of the Clemente Global Growth Fund and
have held most of the shares for a long time. Although recent performance has
been good, we have been disappointed by the long-term performance of the Fund
and the persistent discount at which the Fund's shares have traded. We feel
that there is no need to tolerate such a discount, as adequate remedies exist
that are beneficial to all shareholders.
A DISAPPOINTING LONG-TERM INVESTMENT
All of the shareholder reports since the inception of the Fund are the basis of
the following synopsis of the "out of pocket" investment results of the Fund's
owners:
CLEMENTE GLOBAL GROWTH FUND SHAREHOLDER RESULTS
(Values in Thousands - Source: Data from Regular Shareholder Reports)
All Total Total Distr. Monthly
Period Shares Offer Share Mgmt. Director Oper. Paid Index Index
Ending Issued Fees Cost Fees Costs Expense Out Value Units
-------------------------------------------------------------------------------
6/30/87 6,010 5,080 60,100 924 +65.0
12/31/87 232 32 618 830
12/31/88 -118 -850 301 62 1,292 354 1,029 -1.2
12/31/89 457 65 1,864 913 1,206 -0.8
12/31/90 938 72 2,025 943 1,007 -0.9
12/31/91 934 70 1,735 2,062 1,198 -1.7
12/31/92 676 72 1,365 6,187 1,142 -5.4
12/31/93 374 71 1,065 3,830 1,406 -2.7
12/31/94 477 70 1,246 5,657 1,484 -3.8
12/31/95 309 70 977 2,950 1,801 -1.6
12/31/96 320 74 979 5,474 2,053 -2.7
12/31/97 373 75 1,193 5,211 2,386 -2.2
3/31/98 2,730
TOTALS 5,892 5,080 59,250 5,360 733 14,360 33,581 42.0
MSCI World Total 3/31/98 Per Total Results Fund Index
Return Index (US$)** Values Share Value Comparison Shares Units
- ------------------------ ---------------------- ----------------------------
Index Units from Market
Same Cash Flow 42.0 Price: 11.19 65,921 Market Value 65,921 114,630
Times 3/31/98 Net Asset + Payouts 33,581 33,581
Index Value 2,730 Value: 13.11 77,249 - Share Cost 59,250 59,250
Shareholder Value Discount
w/ Index Units 114,630 Loss: 1.92 11,328 Net Gain: 40,252 88,961
WHO GOT WHAT IN THE CLEMENTE GLOBAL GROWTH FUND?
(June 1987 - March 1998)
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Net Gain to Shareholders $ 40 Mil. xxxxxxxxxxxxxxxxxxx
Total Fees & Expenses $ 19 Mil. xxxxxxxxx
Shareholder Loss to Discount $ 11 Mil. xxxxx
Gain to the World Index** $ 89 Mil. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
**Note: The MSCI World Total Return Index is a standard measure of the returns
of capitalization weighted World equities. Index results may be affected
because the index is not subject to the same investment policies and
restrictions as the Fund. Also, the index is computed on a month-end basis
only, so applying the Fund cash flows during each fiscal year to year-end and
month-end index values is only an approximation of alternative results.
SYNOPSIS OF SHAREHOLDER INVESTMENT RESULTS
This has been a disappointing long-term investment. Since inception on 6/30/87,
the Fund's shareholders have paid $59 million to buy shares, received $34
million in distributions, and had an investment with a market value of $66
million as of the Fund's last report dated 3/31/98.
The shareholders paid out $19 million in advisory fees, director fees,
underwriting fees, and other expenses while making only about $40 million on
their investment. As of 3/31/98, the discount was costing each and every
shareholder $1.92 a share or about +17% extra return. The $11 million lost to
the discount is more than one fourth as much as the entire $40 million the
shareholders have collectively managed to realize on their investment since
inception of the Fund eleven years ago.
The Net Asset Value (NAV) performance of the Fund is somewhat better, but it
fails to reflect the devastating impact of the discount on shareholder
investment results.
REMEDIES TO REDUCE THE DISCOUNT & ENHANCE SHAREHOLDER RETURNS
The discount represents an opportunity to markedly improve shareholder
investment results with this Fund. All that is required is that Clemente and
the Board take the actions necessary to enhance shareholder wealth through the
reduction and eventual elimination of the discount. Remedies are available
which would enhance the Net Asset Value (NAV) of the Fund's shares,
reduce/eliminate the discount, and allow shareholders a choice between a closed-
end structure and receiving NAV for all their shares. The only significant
impact of such actions would be a likely reduction in the advisory fee income
paid to Clemente Capital due to those shareholders who choose to cash out
entirely. Transactions can be structured so that there will be no resulting tax
impact on those shareholders choosing to remain in the closed-end structure.
REMEDY #1 - PERPETUAL SHARE BUYBACKS TO ENHANCE NAV & REDUCE DISCOUNTS
Share buybacks have been viewed by the industry as a failure because, even
though they have always enhanced NAV, they have never permanently fixed the
discount. This is not surprising because all repurchase plans have been limited
in size and duration. You don't get a permanent fix with a temporary band-aid.
Instead, if a fund unequivocally committed to perpetual, maximum buybacks
whenever a discount existed, there would always be a buyer for the Fund's
shares. Potential sellers would learn to be patient and it would lower the
discount at which they were willing to sell. Every share that the Fund bought
at a discount would enhance NAV and the performance of the Fund. This would
attract other buyers and serve to rebalance the demand/supply equation at a
lower discount level. Logic suggests that eventually the price would stabilize
in a range somewhere near NAV.
The value of such a program to existing shareholders is significant. For
example, suppose repurchases began at a 14% discount (similar to that of
Clemente Global Growth Fund), suppose it took one half of the Fund's assets and
one year to reduce the discount to 0%, suppose the average purchase price were
at a 7% discount, and further suppose that the Fund's portfolio securities
appreciated 10% during the same year net of expenses. In this case, those
shareholders sticking with the Fund would see their investment increase by about
+34% (+17% from discount elimination, +7% from NAV enhancement, +10% from the
portfolio increase).
Repurchasing shares at a discount is equivalent to buying the fund's own
carefully chosen portfolio at prices cheaper than those available in the market.
The turnover of the Clemente Global Growth Fund has ranged from 82% to 125% in
recent years. What could be a better investment for the Fund?
A reduction in Fund size by one half might increase the Fund's expense ratio
from about 1.6% to somewhere around 2.5%. Most shareholders would gladly make
this tradeoff to eliminate the discount and enhance their wealth.
REMEDY #2 - SPLITTING UP THE FUND TO SATISFY ALL SHAREHOLDERS
Many shareholders feel that they should be entitled to receive full NAV for
their shares right away and should not have to wait for perpetual share buybacks
or other techniques to slowly eliminate the discount. They desire that the Fund
be open-ended. Fund Advisors and Boards often object that this is not fair to
shareholders who like the closed-end structure. They argue that open-ending
will create tax consequences and costs due to massive redemptions when other
shareholders cash out.
There is a solution which should satisfy all shareholders. The Fund could do a
self-tender offer for its shares in exchange for an in-kind distribution of its
portfolio. Those wishing to remain in the closed-end fund would not have any
tax consequences as a result.
The tendering shareholders could be given a further option to exchange their
portfolio proceeds for shares of a newly formed open-end fund created for that
purpose or alternatively a liquidating trust which would sell them out. The
entire series of transactions could be structured so that all expenses and tax
impacts would be borne only by the those shareholders who chose to tender.
A somewhat similar action has already been proposed by another closed-end fund
organization. In that case, complications have been introduced by a decision to
first orchestrate a merger between two different closed-end funds. The merger
results in restrictions as to the sizes of the resulting open and closed-end
entities which limits the tender offer. I believe such restrictions would not
exist in the case of the Clemente Global Growth Fund. Never-the-less, the
groundwork has already been laid for a technique which could satisfy all
shareholders.
A further advantage of this approach is that it would remove from the market the
large number of the Fund's shareholders who are currently willing to sell their
shares at less than NAV, and leave only those shareholders who truly desire the
closed-end format in the remaining closed-end fund.
The optimal solution for the Clemente Global Growth Fund might be a combination
of the two remedies: First, allowing those who wished NAV to exit to an open-
end counterpart or cash out, and then instituting a perpetual buyback program in
the remaining closed-end fund to keep the discount from reappearing.
THE MEETING WITH THE BOARD
I am looking forward to a productive discussion with the Board. In my opinion,
there should be no need for contention and confrontation between the
shareholders and their fiduciaries. Let us work together productively to solve
the discount problem of the Fund in a way which maximizes the benefit to all
shareholders. Together, I am sure we can figure out options to satisfy the
different needs of both those shareholders who prefer the closed-end structure
and those who desire NAV for their shares.
Very truly yours,
Ronald G. Olin
President, Deep Discount Advisors
