IFM - Infomedia Limited

[jbocker]

A good day out today (up 12.3%) -some decent return to form, I imagine that Hyundai USA would be a pretty substantial bit of business; and probably not an easy market to crack.

I will keep watching its progress.

 

[craft]

Skimming through charts of my holdings again and another possible setup [Setup to trade? or Setup to pose a question?] for Peter2.

The potential set up.

Small consolidation above a support/resistance line – gives a nice close logical initial stop. Trend is up and an unfilled prior gap looks like it may be a breakaway gap.




The question.
Do you still take this trade in context of the larger picture?


Pull back with island reversal now approaching resistance of the large uptrend.



Volatility insignificant to the longer term time frame will be very significant to the short term trade? This volatility could just as easily trigger your stop or make the trade a very nice multiple R in a short time if it breaks the larger time frame resistance with you already on it.

Do you take the setup applicable to your time frame? – Do you bow out because of the larger time frame context presenting a limited upside before encountering the longer term resistance?

 

[peter2]

IFM is approaching yearly highs. The price action and the volume indicators (OBV, TMF) are indicative of higher prices. As I mentioned earlier (re MMS) I prefer to buy a trend continuation when the consolidation is sitting above prior highs rather than underneath as we see in this chart.

The last low risk opportunity for a short term trader was the break of the 1.20 level. A buy there would allow some room to see what happens when price reaches the yearly high.

The chart is a difficult one for a trader such as myself. There are multiple gaps. Most of them with the trend on the way up. The last two gaps were due to news with the last cancelling the earlier gap. I'm concerned by the price spikes (down) clearly visible in the chart. These would indicate thin market depth and desperate sellers.

I have to admire the longer term investors who tolerate one of their stocks losing 30% of its value (insignificant volatility).

Yes I identify and trade the setups applicable to my time frame (daily). Every setup must have an acceptable R:R. The larger background (more data points) facilitates the assessment of potential reward. I don't want to see potential resistance too close to the entry.

If we see a small consolidation above the yearly high. Well, you'll have to beat me back with a stick.

 

[craft]

Hi Peter2

I don’t think there is a right or wrong answer to the question I posed – so long as there is an answer to the situation provided by the plan.

Hopefully you will accept some more questions in good spirit as a way of raising topics that have exercised my mind at different times. (no need to answer at all Peter if you don't wish) just putting some thought bubbles out there.

If we see a small consolidation above the yearly high. Well, you'll have to beat me back with a stick.

How many of the really good breakouts give you a small short term consolidation just above the long-term breakout? Does it matter if they don’t, as those that head ‘straight’ north aren’t part of your game plan?

The last low risk opportunity for a short term trader was the break of the 1.20 level. A buy there would allow some room to see what happens when price reaches the yearly high.

If you had entered this trade I assume you would have lifted you stop to ~1.20 on this trade now, the same as an initial stop on a new trade. On that assumption - here's the question - what is the difference in being prepared to take the risk to see what happens at the long term resistance with an open trade and taking a new position. The only difference I can see is a difference in mental accounting between ‘open profits’ and ‘new’ capital – ie you are prepared to lose 8 cents of open profit but not risk 8 cents of capital from previously closed trades. I don’t get that – but then I don’t get a lot of things. To me a risk is worth taking or it’s not, the source of the capital; ie from open profit or from previously closed trades is irrelevant. If you are not prepared to risk ‘new’ capital why wouldn’t you close the open profit now to preserve it? Or would you?

 

[peter2]

No I don't mind. Responding to questions and preparing presentations helps me clarify what I'm doing and why.

How many of the really good breakouts give you a small short term consolidation just above the long-term breakout?

Surprisingly quite a lot and I only need a dozen. They look like retests of the break-out or they are trend continuation (TC) setups. The hardest part of trading these is anticipating higher prices and actually placing the pending buy stop orders. Hesitate or procrastinate and we miss the best price. This is an important skill for the momentum trader to acquire along with the ability to cut the losses quickly.

This is the type of trading that we are simulating in Pav's momentum thread.

Personally, I spend my analytical time trying to find and trade the main break-outs. TC setups are used to add to my initial position (if it is not maxed out and it generally is with a tight iSL). I do use larger consolidations above old highs to start trades when I've missed the best opportunity (eg MMS, AHE). Naturally I love it when the break-out goes straight up (TOL chart ).

If, in a few months time IFM shows a large ascending triangle pattern that will be my setup for a trade with medium term expectations.

The only setup I'd trade in the IFM chart once the blue bars printed is the BO at 1.20 (iSL 1.05). After the second gap was tested and demand returned. The BO of the smaller consolidation does not interest me as it's too close to the yearly high. I may reduce the open risk (TS to 1.15) as the 1.20 level has held. My downside exposure is now only 0.05 and I've allowed price a band of 0.15 to see if there is enough demand to push price past the yearly highs. Risk is 0.05 for a potential reward hopefully much greater than 0.10.

We are perhaps discussing management of different trading styles. Medium term (me) vs short term (Pav). A less discerning momentum trader may buy the IFM BO at 1.20 using a 0.05 risk and the target would be the yearly high at 1.30 (Risk 0.05 for a 0.10 reward. Bank it. next trade).

If price is approaching a level of resistance or other events (eg. scheduled news) I'd rather be risking open profit than my capital. I wouldn't knowingly risk my capital (start a trade) in this situation as it's not worth taking. (We agree).

 

[jbocker]

Are you concerned about the turnaround-initiating founder's retirement?
I have been following this one for a while but this recent update definitely turned me off a bit..

Well two years on your concerns seem to have been justified. Looks like the board has evolved somewhat and depressed the price significantly. So concerning in fact that the founder Richard Graham and the 'disposed' Jonathan Pollard have asked shareholders to vote them to re-join the board. Had a very interesting 4 page letter sent by both to shareholders titled "This is the most important election in the history of Infomedia."

If you are a shareholder I would read it and take considered action at the AGM election held later this month.

 

[jbocker]

Well two years on your concerns seem to have been justified. Looks like the board has evolved somewhat and depressed the price significantly. So concerning in fact that the founder Richard Graham and the 'disposed' Jonathan Pollard have asked shareholders to vote them to re-join the board. Had a very interesting 4 page letter sent by both to shareholders titled "This is the most important election in the history of Infomedia."

If you are a shareholder I would read it and take considered action at the AGM election held later this month.

The Chairman has responded today, which I have read but I am unconvinced. For one, I don't like being told not to look back into the past (in this case it had embraced change and been remarkably good). Secondly, I don't see that you raise the directors fees after only after a year in the job and in the current climate, where nearly everyone I know has been subjected to cuts, rationalisation of costs, job losses etc. Thirdly, Why was the last CEO let go (and reading between the lines of earlier announcements may have been done unceremoniously) and now we are in search of a new one. Add to this we are encouraged not to vote for the former chairman and co founder and the deposed CEO.

Reads to me something is awry, and I think it rests with the current chairman and the board.
Interested in others thoughts.

 

[oldblue]

Here's Roger Montgomery's take on the question.

http://rogermontgomery.com/whats-th...-82636925&mc_cid=4c33a6fb3f&mc_eid=9f402457b0

Disc: Not holding.

 

[Wysiwyg]

Noticed a block special crossing of 4 million shares just went through. 3rd highest volume for the year. Something afoot?

 

[craft]

Noticed a block special crossing of 4 million shares just went through. 3rd highest volume for the year. Something afoot?

That's about the number Richard Graham had. Suspect he has sold out. Institutional funds backed current board big time, so I suspect one/couple of them took the parcel.

 

[jbocker]

What is going on here? >8 000 000 shares sold (inside first hour) price around 25% lower. No Announcement.

I had held these for quite some time and bailed out of them a few weeks back. I hadn't been entirely happy with the management change out and no sign of any improvement since (granted it is a difficult market).

Happy to have left.

 

[jbocker]

Announcement just made (1 hour after open). In response to speculative media comments about competitors contract win for electronic parts catalogue with Landrover.

 

[shouldaindex]

If a stock can be affected -25% by a contract win or loss, it's eventually going to happen.

 

[Ves]

It's interesting that note 23 of the 2015 annual report says than IFM has no reliance on any major customer (ie. this is the part where companies disclose if there is a major customer from who they earn a material part of their revenue).

From my admitted lack of knowledge about IFM, I've observed that there was a lot of debate / speculation over the board (old management vs new management) last year. It appears that the market has now lost faith in the current management's ability to keep existing contracts, let alone win any new contacts. Which, if became a reality, may bring about even more board turmoil?

 

[Wysiwyg]

What is going on here? >8 000 000 shares sold (inside first hour) price around 25% lower. No Announcement.

Announcement just made (1 hour after open). In response to speculative media comments about competitors contract win for electronic parts catalogue with Landrover.

The announcement confirmed the IFM contract was "recently renewed" with Landreover till December 2017 so there is no material reason for the share price to drop so much. This is insider trading which is illegal. Time to prosecute the cheats.

 

[skc]

The announcement confirmed the IFM contract was "recently renewed" with Landreover till December 2017 so there is no material reason for the share price to drop so much. This is insider trading which is illegal. Time to prosecute the cheats.

This announcement was in the public domain since 9 Feb. Someone must have happened to find it and the news spread.

It looks like JLR will switch over to their competitors by the end of 2017... IFM's announcement is unclear and certainly not timely! Nothing "insider" about this at all.

http://www.clifford-thames.com/announcements/

Following a competitive tender for the Jaguar Land Rover Electronic Parts Catalogue, Clifford Thames are thrilled to announce their selection to design, develop and deploy the solution to over 15,000 JLR outlets worldwide, which will identify the spare parts required to service, repair and accessorise vehicles.

 

[oldblue]

In it's present mood the market will react and over-react to any and all news, rumours, hints of news, re-hashing of old news - whatever.

 

[Wysiwyg]

It looks like JLR will switch over to their competitors by the end of 2017... IFM's announcement is unclear and certainly not timely! Nothing "insider" about this at all.

That is some knee jerk reaction for a contract announcement nearly 2 years away. I don't think share holders should be required to scour the internet and newspapers for information regarding their business. It may not be insider trading because of the Clifford James glowing announcement on Tuesday as an excuse for an ASX please explain.

I notice the Clifford James announcement does not include the date of December 2017 so Neville Knee Jerk may have thought it was happening now.

 

[craft]

The bust up with JLR started over a year ago and came to light when the super service menu contract wasn’t renewed. JLR wanted access to IFM intellectual property to aid the development of their own catalogue and IFM didn’t want to give it.

Surprisingly IFM gained what was effectively an extension to the JLR Microcat agreement until 2017 I didn’t think this would be renewed after the original 2016 contract end. I read this that the JLR in-house was running behind schedule. IFM made an announcement on their site on FEB 2 about this new contract but not on the ASX – guess they didn't consider it material enough at the time.

Couple of days ago Clifford Thames announces that they have won a contract to design, develop and deploy the inhouse for JLR. IFM was never going to win this, it’s not what they do. They are in competition to in-house solutions hence the original spat over intellectual property.

Today we get some market action which seems to have prompted an explanatory announcement from the company? But is the market action even related to this? Really I don’t see anything new or unexpected here that an informed follower of the company would be surprised about.

Market action prompted the announcement but is the announcement really the explanation? If the company felt it needed to respond to the market action with this detail – should it have already made an announcement on the 2nd and 9th of February? Wouldn’t say these guys are all over the nuances of public company communication.

What makes or breaks IFM is if they can do software solutions in their niche better (effective/efficient) then the competition providers or in-house solutions. That’s a bit up for debate at the moment and has been since JLR first flagged going in-house (are they the first of many or is there peculiarities that make them the exception), Until there is some strategy outlined from the new CEO or they get some more contract runs on the board IFM would have to be susceptible to a nervous market I would have thought, maybe that's all that played out this morning, until then the share price had been quite resilient comparatively for the last couple of months considering the uncertainty in the business.

 

[Ves]

That's a good post. Thanks for the input.

Management doesn't seem that competent to me - correct me if I'm wrong, but I thought the old management that didn't successfully win the board challenge had all the business experience and the new (current) folks didn't have much in the way of industry experience (but had the support of the instos).

The awkward disclosure today doesn't do much to convince me otherwise.

It's a decent business and isn't exactly expensive, but I can't hold it unless I can trust the board.