A light aircraft pilot entering the pattern at LMO reported an NMAC with another light aircraft.

Narrative

I was flying left downwind for 11 at LMO; following another aircraft. Pattern radio chatter included warnings about buzzards on both ends of runway and I caught part of a radio call for a downwind departure. I assumed the downwind departure was the other aircraft; so I positioned myself inside a bit and began looking for buzzards. Before I knew it; I was surprised to find myself nearly abeam the other aircraft; left of it and a little below; separated by 150 FT or so. That was way too close but I was positioned to make my base turn so I made it and I think I called the turn on radio. On final; I heard the other aircraft call his left base and that made me realize that he was landing; not departing - and that I had also cut him from his position in the pattern. I landed uneventfully and after taxiing onto the ramp and after seeing the other aircraft turn onto the taxiway; I called out an apology on the radio. I know better than this. I should have adjusted airspeed much more when I entered the pattern behind the slower aircraft; kept my eye on him; not assumed that he was the one departing when not hearing the entire departure call; and scanned the sky around me beyond trying to find the buzzards. All the things safe; conscientious and courteous pilots are taught to do.