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Trading IMI: purge the house-the great first step

Discussion in 'Shares' started by wdongli, 10th Mar, 2011.

  1. wdongli

    wdongli Well-Known Member

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    I bought $19,800 of IMI shares at $0.001 mainly because

    1. its price crashed from $0.07 to $0.001 which means all of value is gone since GFC and incapability of its old board. It just has two options since then: closing the door or reborn painfully. The pains have been paid by all of its old shareholders in my view. If it could not close the door, any new big shareholder has to change it completely! How? By then no one knew!

    2. the event that Melbourne Special Imaging were taken over by IMI before Aug 2010. After reading all of relevant announcement I do feel it was an even of reverse taking over of IMI by MSI which needed the shell to list in the market.

    with the alert that I could lose all and so I locked enough profit to cover the possible loss and rebalance my portfolio by the selling of FMS, SSN, and other winners in my dirty-cheap fish portfolio.

    Since then IMI price crashed again. No hope and no one knows what happen to it. But the resign of some directors told us some conflict, very seriously, about the IMI future, has happened. Market dislikes the uncertainties even all of great or bad things brewed in private first. The selling on the fire is very logic in the market. However most of market players around it forget one fundamental point: its new shareholder with more than 50% ownership would not give up to fight until his last second. Do wonder is he a type of investor or business with deep understanding of the market and business? Reading about Melbourne Special Imaging give me the feeling he should be.

    Yesterday it announced new director who hold more than 50% of IMI. Today it announced a major shareholder ask a meeting to remove all of the old directors, the specialists to make money for themselves but destroy the company asset completely.

    I am very happy to hear these two announcement. I am happy since it is the logic development from the company-saving takeover. I am happy since it just happens when it should since the new major shareholder has had to sort out his mind first. If I were the major shareholder I would do the same things. I would not worry how the share price was affected by the delay of qtr report but I would not let IMI die since if its death would means my completely failure. I am happy I paid less than all of the new major shareholders by taking the same risks. If IMI could not close the door, it could make a life turning point for me. Money is in the risk if we could afford to lose all.

    Could this major shareholder make IMI reborn or could IMI be a valley of death of a very successful professional and businessman? I don't know but the first step is in the sight and it is great event to all of new shareholders of IMI. We don't have the pains of the past and then we could expect better future. Do hope this new major shareholder could be successful!
     
    Last edited by a moderator: 10th Mar, 2011
  2. wdongli

    wdongli Well-Known Member

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    The house is cleaned up but...

    IMI seems not dying but looks for the ways out of the ruins caused by the incapability of its old management team and the terrible GFC crash. Still could not see the sign it could be reborn and actually no one could see so externally.

    Today it announced that CAJ acquired its radiological business and actually get some cash for survival and become the biggest shareholder of CAJ, 13% of CAJ. Also it announced yesterday that all of its old directors resigned and a new board has been formed. All of these directors are accountants or have strong senses to count the money. All of these are good start. If the current big shareholders use IMI as shell to get into list, now IMI is using CAJ to get the survival cash flow and take the control of CAJ in the circle of IMI big share holders are confident. IMI has bought 2 years time to play for its future.

    Logical reasoning that these new directors should be those who designed the taking-over of IMI in the team of the current big shareholders. They sound have their strategy and plan to float IMI. I bet on IMI in a quite big capital. Do hope it could turn the course under the guide of the new board. If they fail they would fail much worse than me, which make me confident on them. Buying the dirty cheap companies in the ruins needs more gut than I bought IMI in the GFC ruins. Fortune comes to the wise and brave men or women. I do hope they are wise and brave!

    If they could get IMI price to $0.01 or $0.02 even in two years, all of new shareholders would be very happy! I would be very happy too! I hope it could happen in 2012/2013 financial year. Could the new board make the dream to be true? Could my judgment and conclusion to be right? I don't know but just do what I thought to be true and right!
     
  3. Tropo

    Tropo Well-Known Member

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    Chinese Proverb
    If you must play, decide on three things at the start:
    the rules of the game,
    the stakes,
    and the quitting time...:cool:
     
  4. wdongli

    wdongli Well-Known Member

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    Yes, no rules mean no mind which will result in running in the ruins of crashed tunnel without light. All want to get something but could not get anything if not ready to lose something first. Quitting and when quitting is the most difficult matters in the market. Value is not constant and elusive always. To compensate the risks to quit wrongly, buying hard with the margin of safety is the key. However how could we know we hold the margin in the future absolutely? Some systematic and strategical thought is necessary to be sure we never fall down into the hell in the market. What are they? Could we get them and see the invisible when herd wonder what would happen next?

    No intention to say for right or wrong but do hope all of us could open the mind for the profit!
     
  5. Tropo

    Tropo Well-Known Member

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    Well....I am afraid that you are still guessing and hoping.
    First, think how much you may lose, before taking profit.
    It's very boring saying the same stuff again and again....but without rules/system you will not survive in the market long enough to make any money.
    You cannot develop certain strategy, without having a robust system in place.
    Also you must know when to be in the market and when to step aside.
    Unfortunately, nobody so far made any money without losing some of it, and seems to me that you do have a problem with this fact. :eek:
     
  6. wdongli

    wdongli Well-Known Member

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    Thank you, Tropo! All of you concerns are very important to all of us as market players.

    Yes it is very important for us to know how much we could lose and we have to be ready to lose rather than to make the profit. We need a robust system and a robust system must have some trustful rules. What're the general and basic rules to get the long-term profit? How could we mix these basic rules with our daily operation to together for a system for a visionary and fail-safe strategies? In my view, the basic rule is that as W. Buffet said, no loss, never lose, never forget no loss. This rule should be followed by our portfolio not each of individual shares since we have to take some right risks for chances. We have to get the balance of the safety of our portfolios and risk affordability of each individual share we hole.

    To IMI, it seems very risky since its price just came down and down in the past, but if we count on its value into our concern, its value should be about $0.003-$0.005 around, which is the empty shell that has been used by its biggest shareholders and the radiological imaging business brought in by its biggest shareholders. Buying value is buying at depressed time. Could we say it was much better we paid $0.001 than $0.005 at which its old shareholders still did not feel hopeless for themselves? How could we get the discount? When all want some of IMI or all of its shareholders want run on sale desperately?

    Its biggest shareholders bought in for the empty shell at the worst time. I did feel they acted as Cigar Butt Collectors as Buffett did at his 30s. I believe they know the misery situation of IMI when they bought in. Now it bought in CAJ and become the biggest shareholders of CAJ. I have calculated CAJ's book value which is about $0.06 per share, which would result in $18.5million book value in total. IMI now has 13%(if CAJ takes over of the radiological imaging business of IMI), which means at least $2.4million book value of IMI plus $450,000 working capital for two years. IMI has 2000milllon outstanding shares, so the book value per share is about $0.0014 more or less from the asset of CAJ. CAJ did very well in the first half of 2010/2011. Its price has been in the bottom and its value is assumed about $0.09 based on some broker's calculation. So if market is efficient, IMI should be priced at $0.002 soon. http://imagesignal.comsec.com.au/asxdata/20110217/pdf/01152147.pdf

    Yes no one could predict the future but what the worst could be to IMI? All of old directors were gone. All of old share holders are the losers. I bought at $0.001 for $19,800 around, which is lower than all of others to pay for IMI. If CAJ will not do too bad, IMI would be survival. That is very important to its new shareholders. IMI if could survive for two years, it would pass the worst time in the market for a few generations! It is what GFC to the dreadful shares in the market. I believe it is right risk for good enough return even I could not predict what would happen really to it.

    Market is a place where there are a lot of black swans. I trust to buy lowest price in the bottom channel more than others, which is about value shown and confirmed in history. IMI just has two options, reborn or die. So far I feel the new biggest shareholders know what they want and what they could get. They bought in IMI at the worst time and it could be the best time if they could turn the course of IMI.

    Since 2004, I mainly play the dirty-cheap fishes and bought them at the worst time I believed. The statistics shows in Australia, only 1% of these penny shares would close the door; 3-5% would struggle for survival, 4-6% would come back from lowest price; 2% would give the bargain hunters 50% -1000% return if they could get them at lowest price around. The key is you have to diversify and average the risk in time to filter the falling knife effect away. Since 2007 I got Fdl, Iau, Azz, Ssn, Prr, and some of others at their lowest price into my portfolio and I had held them for years. The return since 2004 is very promising. The key is we could not follow the market sentiment and sell in panic, which need big enough cash reserve in hand.

    We have to know we could not be right for all of our buying. We have to let the winners run long enough. Prr gave me about 2000% return, which ensured the rule, no loss for my portfolio. Seriously saying I never know which one would be 10 baggers and we have to get a system to generate one or two 10 baggers if we could try to buy at the lowest price and once we feel some fishes could be 10 baggers we have to know the causes fundamentally. So far I expect a lot on Pdy, Arx, Arh, Auz, and Bkp. However I have to admit so far all of my 10baggers or better ones are not those I have high expectation, such as Fdl, when I bought it, all of my friends said I was crazy! However my question is if all could see the 10 baggers could I get the 10 baggers? If others could not see, why could I see them? I would simply could not see them too. We do need to know risks are the source of the chances and never let risks push us into the hell.

    How about IMI and some I got in the correction of Oct 2010? I expect they could get feet on the solid ground in 2010/2011, expect some could close the doors, and feel some would be hit by some good black swans in 2011/2012. XAO has been under-priced now in my view and moms and dads would come back when they should stay home when the price moves up greatly. There are a lot of different strategies in the market and if we could use properly we could get the profit. I prefer the strategy that could let me hide somewhere for the good black swans. At last we have to buy low and sell high; low enough for buying and high enough for selling without matter what system we use, otherwise we will fail ourselves in the market.

    Buying hard, holding hard, and sell enough are what I want to get in the market. Could I do so? Not sure and I need more years to update my mind.
     
    Last edited by a moderator: 26th Mar, 2011
  7. wdongli

    wdongli Well-Known Member

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    Does matter or dosn't matter?

    Is loss really matter in the market? Is profit really matter in the market? Is falling knife really mater in the market? Is 10 baggers really matter? No anyone itself really is matter to a market player! Vitality, shirt-loss, life-turning points, happiness in long term, dancing on tap to work your ways in the market, and accumulated profit for all of your fundamental basis, are really matter.

    IMI was a falling knife in last few years, did you lose too much and vitally it hurt you too hard? If so, it was really matter. Was it matter you get 10 baggers from your initial betting on SSN but you just put $200 in it? Could we feel it doesn't matter if IMI would close the door? Could we feel it will be really matter if it could be 10baggers in 2 years? It doesn't matter how your system is comprehensive or great, if you just always it does matter thing to lose your money, or it doesn't matter to get the profit, you just would put you into the water for people to hit!

    Don't forget if you always make the loss do matter or profit do not matter, your loves would make everything do matter to you and really and really matter to your future!

    Could IMI give me the matter I really think it does matter positively or vice versa?
     
    Last edited by a moderator: 27th Mar, 2011
  8. Tropo

    Tropo Well-Known Member

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    Value as such is very illusionary.
    If all players agree on "value", nobody will buy and/or sell.

    There are too many examples showing that company balance sheets, earnings, disclosers etc do not represent a real picture.
    Few examples such as HIH, Wordcom, Enron, ABC Learning etc...are showing how wrong fundamental analysis can be.
    Market is NOT run by balance sheets, but is run by human behaviour...
    If your trading/investing decisions are based only on brokers calculations or other fundamental information, you are simply asking for trouble.
    Current/historical share prices represent a 100% certainty. Other than that - nothing is certain.
    Good reading is below:
    http://www.invested.com.au/79/diversification-37555/
    http://www.invested.com.au/90/risk-38368/
    http://www.invested.com.au/90/need-certainty-37258/
    http://www.invested.com.au/90/so-you-think-you-can-trade-36933/
    http://www.invested.com.au/79/night-terrors-37744/
    http://www.invested.com.au/85/delusionary-tactics-market-dummies-38052/
    http://www.invested.com.au/79/how-stock-market-works-37196/
    A yes...Fundamentals = Funnymentals ! :rolleyes:
     
  9. wdongli

    wdongli Well-Known Member

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    Yes Tropo, anyone if plays value without wisdom, would be trapped by value. Time is not important but it is everything in the market. What wisdom needs to be linked with value? It is how we use the margin of safety, worst possible price much lower than the bottom edge of the value, unprecedented worse time than the worst time we could image.

    I believed IMI has touched its worst point but I could be wrong. What could be worse than my worst counting? It is about the closing the door. What if it would happen? it would be about 7% of my dirty-cheap portfolio. Actually I have locked more profit than it in last October by selling IAU(150% profit), FMS(more than 10 baggers), AZZ(150%), SSN(about 6 baggers), and other winners(30 - 100% profit), which let me feel enough.

    You are right, we could not play one share only with all of our asset. We need diversification, time average, and rebalance of our portfolio. The idea behind what I did is simple that is if we could buy all at the lowest price we believe we should get profit in long run for our portfolio. As I said IMI is not to get profit for tomorrow and it could fail. However I don't think if we have 30 shares like IMI, we would lose our shirts. For 100 years, Australia pennies never close the door at the same time at the failure rate more than 5% except 1929 around.

    Everything could make money or lose money. The key is when we hit out, how we hit out, and how much force we use to hit out! At moment, I have about 30 dirty-cheap fishes in hand. I never chase after the cheerful uptrend if I could control myself rather than I prefer buy at the sale on fire. IMI has been in sale on fire for about 2 years. Now all of its old shareholders have sold out and such the cuts in pains. All of new shareholders are sort of bargain hunters and should know what risk they are playing. Actually IMI sold its radiological imaging business to CAJ could be a way to take over of CAJ in future if CAJ could do as it did in last two years. If the unprecedented events made all of old shareholders of IMI were losers, could we expect some unprecedented events make all of new shareholders be winners?

    I don't believe we could see future 10 baggers now and all of them only could be got when you buy them when no one want in the market. In probability sense, it is unlikely the shares would be sold on fire always. If we get in at the unlikely price and time we should likely get enough profit. Of course we have to get the cash and gut to hold until everyone wants some form you!

    I bought in BKP at $0.005 since its shale rock oil and then no one could see the hopes. Now it is about $0.021. If it could drill the oil out and its billion barrel reserve could be confirmed, it could be $1 share. I bought Pdy at $0.004 and then no hope at all, but now it is about $0.03 around. We could not make all of our fishes into our 10 baggers and some could be falling knifes. However what if I could get 2 of 30 of my shares to be 10 baggers per year? No loss but profit of the portfolio as a whole. The falling knife is the cost I have to pay and I have to control the cost never bigger than I could afford. Since 2004, I tried all to win big enough if I am right; lose affordable capital if I am wrong; and I expect I would make a lot of trivial mistakes in future; I would never let the trivial many destroy my vital few!

    We need creative thought, which is wise, risk intelligent, and gut supported. Some would be worse than the worst we could believe; some would stay in the water to struggle; some would float away for their better future. Could we manage all of them for our better future?
     
    Last edited by a moderator: 27th Mar, 2011
  10. Tropo

    Tropo Well-Known Member

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    Forget value. There is no connection between value and wisdom.
    Philosophical approach to trading is not the best way to go.
    Timing is important. You are making money only if you sell at the right time.
    Getting 2 trades out of 30 may be disastrous, even if you are lucky enough to make 10 times per 2 trades per year.
    One of the most important aspects in trading/investing is a win/loss ratio.
    If you are making much more than you are losing, then you are doing well.
    Intelligence has nothing to do with a successful trading. Statistically the worst traders are lawyers and doctors...
    There is no such thing as intelligent risk, creativity etc....All comes down to having a robust system and following it.
    Guessing, hoping and praying is a recipe for disaster.
     
  11. wdongli

    wdongli Well-Known Member

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    Haha Tropo, that is perfect right. Every way could lead to Rome and hope all of us could get best in our own ways. Never guess, hope, and pray to run a great system but wisely and properly run it and make it fail-safe! I will try to fix my system problem bit by bit. Yes, how could I get 28 of 10 baggers from 30 shares every year? If I could do so, I should have a great system then! One of my friends seriously told me that I was a fengZhi(a mad man) in 2004. In case I was called as FengZhi again, now I only could say it is possible but unlikely. LOL!
     
  12. Tropo

    Tropo Well-Known Member

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    hihihehe...If you get 10 times 28 shares out of 30 (or 32 out of 30 :p) - let me know...;)
    Well ... keep on dreaming, but in the meantime read "The Art Of War" by Sun Tzu .... Art of War by SunTzu [SunZi] -English Hypertext
     
  13. wdongli

    wdongli Well-Known Member

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    It is a book every market player has to read. I have read them a few times, but frankly saying I do feel my knowledge base still could not let me understand the art of war/market enough. The art means some scientific, some imaginative, some abstract, some real, some creative, some flashing matters, and so on, all of which generate a future vision that should mostly match the needs of the future market playing with the fail-safe mechanism.

    Could we get this art? Yes but very difficult as we see 80% of market players fail since they could not be the artists! Could some of us here be the artists? I don't really hope(even I would try my bet to do so, which would let me dance on tap to work) to leave some master pieces in this world but I do want to make some I could appreciate by myself in retirement.

    By the way, art means all of us need some lucks and the capability to grip on some of them with affordable risks, which is especially important to our first bucket of gold. The more practical concerns now to me is how to get 4x10baggers out of 30 shares every year in the near future, and increase it slowly to 30 of 30 for perfect!
     
  14. wdongli

    wdongli Well-Known Member

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    It is a falling knife to me!

    Completely fail is my conclusion now!

    Today it announced a share consolidation, 15:1, and a new right issue at $0.003 after the consolidation. Its biggest shareholders have accepted the fact the value evaluation they did were completed wrong. It also put the nail on the confirmed loss of my principal in IMI too.

    The right issues were designed to attract bargain hunters since 1.7 billions shares of the biggest shareholder would be sold through the underwriter at $0.003(should be the price after consolidation and the share number should be before the consolidation. IMI has 45.3 millions of CAJ shares, which is about 2.3millions dollar. However after the dilution, it would have 1.4million dollar in cash. All are about being survival. I overbought IMI first and then even it is a sale on fire, I could not buy more without the concerning about the affordability if I join the right issues.

    1. $1.85 millions from right issue before any cost, which means 616 millions new share x 2 = total 1,213 million shares after consolidation. It will get $1.4million from right issue and $2.3millon of CAJ market cap. So each new share would have market cap: $0.00305

    2. If I join the right issue, which will need $3,900 new capital, which will give me another 1,320,000 IMI shares plus 1,320,000 options at exercise price of $0.003.

    2.1> 2,640,000 share x $0.003 = $7,920

    2.2> If IMI could not be recovered to $0.01, the loss is certain!

    2.3> 1.32 million options could be zero.

    [​IMG]

    1. Specie distribution of CAJ shares, all or part?

    2. If all and should be all, $2.3millions/1,213 millions = $0.00189 per share after consolidation, so 2.6million share x $0.00189 = $4,914; The cash $1.4millions/1,213millions = $0.00115 per share, so 2.6millioin x $0.00115 = $3000

    3. I have to admit I am cutting by a falling knife and I still could not find the reasons if I am not its existing shareholder I would buy it in the market. Should I buy CAJ at the current price? If not, why I join the right issue?

    ***
    1. How much would the clean shell of IMI be?

    2. The cash of $1.4millions after CAJ being distributed out, is the only asset?

    3. Any explosive events in IMI is possible?

    4. what if writing off all of IMI I hold?

    There are one and half months ahead. So I still have the time to pondering. Did I make a mistake to buy IMI? I still think I should buy even it would be better if I just put $10,000 into IMI.

    What I wrote before was completely wrong since the share outstanding used were 510 million only. This mistake made all of my cheerful words about IMI useless and misleading.
     
    Last edited by a moderator: 20th Apr, 2011