IMRE Investment Club

The idea of an Investment Club is not new. Year by year it becomes increasingly popular as people understand that using bank services is probably not the best way of managing money.

Some students of the MBA Program IMRE decided to "join the club" at the end of the year 2005.

The IMRE Investment Club (further referred as the Club) is a non-profit organization at TU Freiberg. Although we are open to all interested university students, the core part is to be comprised of the MBA IMRE students and alumni.

Concept

We have gathered to learn. That is our main purpose. The Club does not deal with real money; all operations of buying and selling are virtual. We use virtual Money to virtually buy/sell and hold shares. The only real thing about it is the effort put by the Members in order to assess the Projects and companies and make the best possible decision. The aim of the game is to reach the maximum % growth in the Club Actives (Money Pool + value of the shares owned by the club), which we believe can prove our ability to manage money.

 

Membership

A person willing to enter the club should first fill in the Application Form. After that, the Applicant has to show a reasonable amount of interest at the Club Meeting, where the Club Members vote upon each Applicant. In case of a positive decision, the Applicant becomes a Club Member. There is, however, a membership fee of 5€ (REAL MONEY!!). The membership continues until the Member give notice to quit or in case of a decision of the majority of Club Members. After quitting the Club, one receives all (theoretical) invested money back +/- dividends. This amount of money is subtracted from the Club Actives. The dividends are calculated at the basis of the most recent evaluation of the Club Actives.

Game

At the beginning, the Club Members are divided into Teams. Each Team is comprised of three to four Club Members. After the creation of the Teams, each Team is assigned a Project. The Topic may be proposed either by the Team Member(s) or the Administration of the Club, and should be agreed upon at the Club Meeting. Every Team appoints a Project Leader, who is responsible for the Project Presentation and Aftermath Tracking. In spite of that fact, every Team Member must contribute to the work of the Team.

A Member can participate in the work of one current Project. A current Project ends with the Presentation at the Club Meeting. A Presentation should meet the minimum requirements and be built on the basis of the General Presentation Template. It has to provide the other Members with the facts which allow them to make the decision of buying or not buying the shares. In the case of a positive decision, the Project Leader becomes responsible for the Aftermath Tracking. The decision is positive when it is supported by the majority (at least 51%) at the Club meeting. At the end of every Quarter, the Project Leader has to report the changes in the stock prices of shares (sends the report to the Club Secretary). The Project Leader is free to initiate the sale of the shares owned by the Club or re-investment: they also report the possibilities of additional purchase of the “successful Project” shares.

Buying Shares

The shares are bought in the case of the positive decision of the Club. Any decision of the Club is in force from the moment of reaching an agreement, unless alternatively stated. The decisions of the Club Meeting are valid only if at lest 51% of the current Members were personally represented and were able to vote.

As long as all Club Members have equal financial contribution to the Money Pool (Start Stake and Monthly Payments), the “One man - one vote” rule is applied. All Members are equal in their rights to vote. Every Member has only one vote.

Selling shares

The shares are held by the Club until:

  • The Project Leader initiates the sale of the shares and the initiation is supported at the Club Meeting
  • The Stock Price reaches its marginal level* set before the purchase of the shares.
  • * Ceilings + Floors — the upper and the lower prices of the shares at which they have to be sold. The rule is binding unless the Project Leader asks for further holding and the Club agrees upon that.
  • The initial money pool available for the operations is defined by the number of the Club Members. Once becoming a Club Member, one brings the Start Stake of 1000€ to the Money Pool. Afterwards, every Club member has to contribute 100€ to the Money pool every month (Monthly Payments). This Money Pool is available to all Projects carried out by the Club. The amount of money assigned to each particular Project is a subject to the Club Members decision at the Club Meeting. The money gained from the Club activities are added to the money pool and become available to the new Projects of the Club.

Assumptions:

  • The amount of money not used for any of the current Projects bears zero interest and is not subject to inflation
  • The participants do not receive any dividends
  • There are no transaction costs
  • There are no other costs (e.g. overhead)
  • All work of the Club Members is voluntary (not paid)

At the moment, the investment activities of the Club are limited to the operations on the stock market.