Selling some Imax (IMAX)
Everyone knows what's wrong with IMAX today -- they offered the company up for sale, they didn't get a buyer at the price they wanted ($12-14), their accounting is in some dispute with the SEC, and, as a result of those first two, the class action lawyers are circling like sharks.
Which just goes to show you how bad a company can perform even when their business is on track and their profits are growing. And why I'm selling some shares today as part of my overall margin reduction initiative.
I don't like selling IMAX -- I'm still holding the shares that I purchased for a retirement account at $6.20 following the disappointing no-buyout news. I thought those shares were a bargain then, and I still think that's well below a fair price for the company.
But given the confusion about their accounting and the risk that their accounting problem will actually develop into something signficant (at this point, it's just a question of recognizing revenue during construction of their theaters, which is a timing issue that I don't much care about), I can't justify borrowing money to hold the shares in my margin account any longer. The fact that the CFO resigned adds a little more urgency to the situation, and may explain why the shares remain in freefall, but I think it's as likely that he was a sacrificial lamb or that he made a simple mistake as that there was any real chicanery going on.
So I'm selling a bit less than half of my overall IMAX holdings, and clearing out all of the shares that I held on margin. This sale brings a loss, of course, so at least it will help me to write off some of the profits I'm taking in other positions.
The Imax shares I'm selling today were purchased at an average price of $7.30, and sold this morning at $4.99 for more than a 30% loss.
Which just goes to show you how bad a company can perform even when their business is on track and their profits are growing. And why I'm selling some shares today as part of my overall margin reduction initiative.
I don't like selling IMAX -- I'm still holding the shares that I purchased for a retirement account at $6.20 following the disappointing no-buyout news. I thought those shares were a bargain then, and I still think that's well below a fair price for the company.
But given the confusion about their accounting and the risk that their accounting problem will actually develop into something signficant (at this point, it's just a question of recognizing revenue during construction of their theaters, which is a timing issue that I don't much care about), I can't justify borrowing money to hold the shares in my margin account any longer. The fact that the CFO resigned adds a little more urgency to the situation, and may explain why the shares remain in freefall, but I think it's as likely that he was a sacrificial lamb or that he made a simple mistake as that there was any real chicanery going on.
So I'm selling a bit less than half of my overall IMAX holdings, and clearing out all of the shares that I held on margin. This sale brings a loss, of course, so at least it will help me to write off some of the profits I'm taking in other positions.
The Imax shares I'm selling today were purchased at an average price of $7.30, and sold this morning at $4.99 for more than a 30% loss.
This article posted by One Guy @ 8/23/2006 11:13:00 AM 2 comments
Add to: del.icio.us *Furl *Google *Spurl *reddit *StumbleUpon *Yahoo MyWeb *
Add to: del.icio.us *Furl *Google *Spurl *reddit *StumbleUpon *Yahoo MyWeb *
