IOF is a safer investment and trade than IIF IMO because gearing is much lower hence able to withstand devaluations better.
I think the only reason IIF hasn't done a cap raising is because the market cap was so low compared to its assets that it would have needed to raise over 2X it's market cap to have a significant impact on gearing - ie bringing it down to 25-30% gearing which seem to be the range the banks are targeting. (IMO this is a STUPIDLY low gearing for companies with stable earnings compared to many other ASX listed businesses with declining earnings and over 60% gearing. But myopic bankers have decided that this will be the way the REITs will be valued and common sense be damned)
If IOF management saw fit to do another huge dilution (unnecessary IMO) when it was lower geared than IIF one can only wonder what they IIF management have planned for IIF.
Either a huge ramp job on the stock forums to drive the SP up prior to a large discounted placement, or they plan to sell the assets/debt into a larger vehicle at a huge discount and I doubt shareholders will benefit from much price upside in either situation.
I actually fear that IOF might end up 'bidding' for IIF (god forbid the bid) because IMO the IOF SP would take a dive and we would have the same instos that destroyed these companies market caps shorting and pressuring IOF a third time for yet another huge dilution.
I am happy with a cent or two for a trade on IOF, but I did think it was going to run higher and sooner than it has over the last week, and I cannot sneeze at 9%.
If the games continue, I will just wait for the standard hard sharp sell before taking another position, failing that I might buy in at the same price if the trading is steady and I think it might run up again, if it opens up and stays above, I will move the capital to another ST trade.
IOF Price at posting:
$2.12 Sentiment: None Disclosure: Held
