Thanks for your reply COD.
Applying an equal 5% increase as you suggest.....
5% at 40 cents is 2 cents
5% at $4 is 20 cents
5% at $40 is $2
The difficulty I have in applying a fixed percentage increase of 5% as you suggest, or whatever % you may choose, is that daily price increase can only be measured as a % once the closing price is known.
The probability of a daily increase remaining at a constant percentage, depending on whether your opening price is without consolidation (40 cents), or with consolidation 1:10 ($4) or 1:100 ($40) is remote and would be nothing more than a highly unlikely coincidence.
Go back to the “outstandingly good news” reference in my earlier post. Truly great news could potentially result in a 30 cent increase in a day.
If the daily SP increases by 30 cents, then it represents a 75% increase without consolidation (ie. 40 cents + 30 cents = 70 cents. 70/40 = 1.75 x 40). On the 1,000,000 shares owned model, you’ve made $300,000 that day and your investment is worth $700,000.
If the consolidated $4 model goes up by 30 cents it is only 7.5% increase to $4.30. To achieve a 75% increase, the SP would need to increase by $3 for the day up to $7! Highly unlikely. On the 100,000 consolidation model, you made only $30,000, increasing your investment value to $430,000.
If the consolidated $40 model goes up by 30 cents, it is 0.75% increase to $40.30. To achieve a 75% increase, the SP would need to increase by $30 for the day to $70! Extremely unlikely. On the 10,000 consolidation model, you made only $3,000 for the day, increasing your investment value to $403,000.
Would you rather have an investment valued at $700,000 or $403,000 at the end of a day’s trading?
I do not accept that the same “truly good news” equates to 30 cents on the unconsolidated model, $3 on the 1:10 model and $30 on the 1:100 model. There is no mathematical reason as to why the SP increase would be a constant percentage.
It agree that it can be postulated that a higher SP might have bigger increases than for example 30 cents, but those daily SP increases are not constant depending on the ratio of consolidation. Pure coincidence- if it occurred. I doubt the percentage would be as high - see the modelling above.
The institutional investors aren’t concerned about consolidation - they are accumulating daily.
I once again acknowledge the highly respected HC posters who are in favour of consolidation.There may be a case for consolidation if the SP increases significantly (think dollars not cents), but now is not the time. There is too much money to made! Leslie says follow the science. As an investor, we should also follow the maths.
As investors we intend to make money. Making money in no way compromises or affects the quality of IMU’s pipeline or the promising results and benefits to some cancer patients.
Best wishes
Go Imugene!
PDS
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