Australia's largest stock trading and investment forum Australia's #1 stock forum

LNU

0.00%

0.2¢ linius technologies limited

Ann: Notice of General Meeting/Proxy Form, page-43

First 43 Last

Share
Profile

Follow
myASX

6,926 Posts.

515

07/06/19

13:56

Post #: 38961139
Share

Originally posted by andrewjh: ↑

I hold and substantially for this reason. However I'm always on the lookout for the counter-thesis. I believe responsible investing is about looking for ways you might be reading the situation wrongly.

What do you think about this as a counter-thesis about the idea that we should have confidence because directors put in $300k each:

Sometimes in a game of poker, the first few rounds of betting can be quite expensive. As it approaches the final card to be turned over and the final round of betting, you become less confident that you will win. You've already bet $10,000 and calculate that the other players have probably got better odds than you do of winning. When the final round of betting comes around, it's a $100 bet to play.

You decide that given your existing stake ($10,000), another $100 is worth throwing in even though the odds are small. Losing $100 will be painful but its worth it to keep alive the chance, though small, of winning the enormous pot.

To apply to LNU... in assessing the significance of the $300k from 3 management players, we would also want to know (1) how much they already have invested, and (2) their net worth.

Let's say the answer to (1) is $2 million each, and lets say the answer to (2) is $10 mil. In this case, $300k represents a fairly small proportion of their net worth (3%). But their existing investment is large proportional to net worth (20%).

Now - If the directors feel that (a) the company is in dire straights and may not ever turn a profit, (b) but there is a slight outside chance that it might if the cards fall the right way... but (c) the only way to know is to fund operating costs for another year or so... They may be prepared to chip in a relatively small extra bet just to keep their game alive.

So on this counter-thesis, the existence of the $300k investments may merely mean the directors haven't lost all hope. They can't pull their money out without crashing the share price because it would reflect a total loss of confidence, so the only chance they have of recovering their initial investment is to play one more round, one last throw of the dice.

Expand

Great thesis but it’s only applies to one person playing poker.
Here we have the 3 directors willing to do the same thing. I haven’t seen that before in any penny stock. Remember Gerard is putting in more than he did at 12.5c. The confidence to do that is immense.

LNU Price at posting: 4.3¢ Sentiment: Buy Disclosure: Held
7 Upvote

0 Great analysis

Reply

Top Stories

AI stocks: What to expect in 2024-25

AUN

Aurumin reports high-grade iron ore rock chips at Central Sandstone, WA

WGX

Australian foreign investment regulators greenlight Westgold's buyout of Karora

M2R

Miramar sniffs 5.48% Cu, 54.4% Pb and 73.48g/t Ag at new WA prospect

ASL

Andean discovers up to 4,649 AgEq through maiden drilling in Chile