Marlin Warrants MLNWE

[tim23]

Due to start trading Monday, any guesses at price given all the stocks in Fisher stable are trading at premium to NTA my guess is 25c

[Beagle]

I suspect that you'll be quite close with that guess Tim. Last traded share price was $1.51 and the warrant exercise price is $1.28 so that suggests based on the share price the warrants might start trading about 23 cps.

What are they really "worth" though ?, (that's the real $64,000 question ?), with NTA at ~ $1.22 less any losses this week (US markets down about 1% for the week).

To answer that question one must consider what premium if any is it fair and reasonable that Marlin trade above NTA and that's another really thorny question.

People will arrive at different answers to this last question and much will depend upon how much value each individual ascribes to the PIE investment structure, the 8% annual tax free dividends, the regular warrant issues, the international diversification this fund gives them as well as the peace of mind of having some of their portfolio managed by excellent fund managers and last and by certainly no means least the fact that the investment team have on average beaten the index after all fees expenses and taxes by over 7% per annum over the last 3 years, (no easy feat by any means).

Each person will need to work that out for themselves but I observe that if one accepts that a 15% premium to NTA is okay considering all of the above and any other pertinent factors, (about 2 years managers outperformance) one will still get just on 7% tax free in dividends (= ~11.5% gross for 39% taxpayers) in which case the shares are worth about $1.40 ($1.22 x 1.15) and the warrants about 12 cents.

Two other observations I would like to make is that the price premium to NTA started as a result of once in a generation low interest rates last year BUT has really accelerated since then to an unprecedented level since Cindy and Grant announced their "interesting" moves on rental property investors.

In my opinion it is not unreasonable to conclude that this very recent phenomenon of trading as high as a 38% premium to NTA recently for this and BRM is a reaction to socialist policies and some investors are very, very keen to diversify their investments offshore, especially if a very high yield is on offer.

How long these very high premiums to NTA remain will be interesting to see. While many on here including myself can easily replicate the portfolio of BRM and Marlin and handle the tax matters themselves (or with professional help) I have observed that most attendees at annual meetings for these companies are quite elderly and just want to be "looked after".

Interesting times for BRM and Marlin share and warrant holders.

Above is just food for though, no perfect answers, just what works for you and what you are prepared to pay.

[alokdhir]

Current Nav is 1.22 ...SP is 1.51 ...Expected warrant exercise price is 1.28- 0.10 = 1.18

Keeping the above in picture and seeing how the current BRMWF trading ....my expected warrant price trading range to start with is 15 cents to 20 cents . Anything over it will be overpriced compared to head share .

All previous warrants have always traded below Head shares current SP after deducting divvies . BRM = 1.03 ...BRWF = 0.28 ...2 dividends still pending so appox $1 SP after deducting 2 further dividends before exercise date . Expected exercise price is 0.70 - 0.06 = 0.64 ...so 64 + 28 = 92 cents ...8 cents discount to current SP ...just an example how market prices warrants ...it depends upon current SP of headshare and some discount to it after deducting expected dividends till exercise date from current SP

Premium over NAV is a new phenomenon and it has various reasons going for it ...not easy to figure out how long they will last ...actually quite challenging to grapple with this problem ...as in first downturn they will evaporate very fast thus hitting SP twice as fast as just market movement

[Vee Vee]

Yes the evaporating premium effect is why I sold my BRM and MLN. I don't want to pay over NTA by that much and don't like the exposure to dilution with the new issue.
Shame as I like MLN in particular, good holdings.
The warrant and new issue merry go round makes the whole affair overcomplicated though.

[alokdhir]

Yes the evaporating premium effect is why I sold my BRM and MLN. I don't want to pay over NTA by that much and don't like the exposure to dilution with the new issue.
Shame as I like MLN in particular, good holdings.
The warrant and new issue merry go round makes the whole affair overcomplicated though.

I am still trying to figure out how to keep holding KFL while not letting dilution via warrants hit me ...Maybe holding warrants till the last month will help minimise that risk of dilution if u dont want to exercise all your warrants ...not easy if u have large holdings .

I like KFL and its portfolio is superb ...all winners and NZ market is underperforming others ...so when it catches up then KFL will do well ...also expecting its new warrant issue in next 3 months so that should bring excitement to the SP ...MFT / FPH / RYM results due soon ...should help KFL .

[Beagle]

So...we have a range of as low as 12 cents to as high as 25 cents, mid point 18.5 cents.

It will be interesting to see how the market sees them.

[777]

Above 25. Below 35.

[Sideshow Bob]

Due to start trading Monday, any guesses at price given all the stocks in Fisher stable are trading at premium to NTA my guess is 25c

Looks like it is 'expected' to start trading tomorrow - Quotation Notice - Marlin Global Ltd ("MLNWE") Warrants - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/371816)

[Beagle]

Awesome...gives me one more day to try and more closely define my theoretical valuation. I'd buy truckloads at 7 cents if they list where Barramundi warrants did, (sigh...oh my goodness that was fun)

[winner69]

Do punters sell their warrants as soon as they get them because they are free and they in for a quick buck?

Or is it they just don’t really understand what’s going on?

[Beagle]

I think some do exactly that.

[alokdhir]

Do punters sell their warrants as soon as they get them because they are free and they in for a quick buck?

Or is it they just don’t really understand what’s going on?

U need to use them to manage your dilution risk of existing Holdings if u are not in a position to bring more funds ...so thats why I suggested is to keep them as close to exercise date but not that close also that technical selling pressure erodes too much value .

This time Fisher funds are trying to value them very close to present NAV as they also trying to take advantage of current 25% premium ...so may not lead to much dilution if NAV remains here or nearby ....only time will tell as they are one year Call options ...existing holders need hold them for 10 months to get better picture ...or exercise them fully . Thats the challenge for long term existing substantial qty holders of these securities .

[alokdhir]

Do punters sell their warrants as soon as they get them because they are free and they in for a quick buck?

Or is it they just don’t really understand what’s going on?

Also its not worthwhile to do that these days ...get in share to get this warrant and sell both to make money ...last 15 days MLN ( Cum warrant ) traded over 157 and now its 149 ...so they need to sell warrants at 32 cents to just break even

[winner69]

U need to use them to manage your dilution risk of existing Holdings if u are not in a position to bring more funds ...so thats why I suggested is to keep them as close to exercise date but not that close also that technical selling pressure erodes too much value .

This time Fisher funds are trying to value them very close to present NAV as they also trying to take advantage of current 25% premium ...so may not lead to much dilution if NAV remains here or nearby ....only time will tell as they are one year Call options ...existing holders need hold them for 10 months to get better picture ...or exercise them fully . Thats the challenge for long term existing substantial qty holders of these securities .

Sounds awfully complex these things called warrants

[alokdhir]

Sounds awfully complex these things called warrants


Thats why many old timers are not happy ...not easy to manage unless u have small holdings then can bring in more funds to subscribe to all . Also many punters are making a killing on them at the expense of poor ill informed or just lethargic holders who are basically into them on buy and forget for regular income . These are instruments for the benefit of fund managers and punters ...exactly opposite to the kind of investors who are mostly the holders ...as they think paying high fund charges will ensure their interest is supreme for fund managers ...But alas ..." everyone plays the fool or trusting people in this world now "

[winner69]

Thats why many old timers are not happy ...not easy to manage unless u have small holdings then can bring in more funds to subscribe to all . Also many punters are making a killing on them at the expense of poor ill informed or just lethargic holders who are basically into them on buy and forget for regular income . These are instruments for the benefit of fund managers and punters ...exactly opposite to the kind of investors who are mostly the holders ...as they think paying high fund charges will ensure their interest is supreme for fund managers ...But alas ..." everyone plays the fool or trusting people in this world now "

The way you put it fund managers etc are playing games and screwing the unit holders

No wonder about 10% don’t get exercised

[alokdhir]

The way you put it fund managers etc are playing games and screwing the unit holders

No wonder about 10% don’t get exercised

I wont exactly say that ...but it turns out that these shares are not for passive investors ...they need to look after their investments by trying to figure out how to manage these regular warrants . Buy and forget will not work ...though may think so or actually hold them for that purpose only

Last Marlin warrants got exercised last Nov only .

[winner69]

I wont exactly say that ...but it turns out that these shares are not for passive investors ...they need to look after their investments by trying to figure out how to manage these regular warrants . Buy and forget will not work ...though may think so or actually hold them for that purpose only

Last Marlin warrants got exercised last Nov only .

And nearly 4 million didn’t get exercised even though new shares were 39% of prevailing price

[Sideshow Bob]

Helps also the cash merry-go-rounds for Fishers. Divvys paid out on one hand, But new funds coming in on the other.....

[alokdhir]

Helps also the cash merry-go-rounds for Fishers. Divvys paid out on one hand, But new funds coming in on the other.....

Their second most important priority is to increase corpus thus their own renumeration ...DRP @ 3% discount works as it increases shares issued ...around 46% elect for that as its lucrative ...get at 3% discount sell in the market that increases dividend value more then if u elect for cash ...so far it is always beneficial to holders .
These days as market SP way over NAV so DRP shares being issued at higher then NAV thus adding to NAV ...all win but for who elects cash dividends ie 54% ...buy and forget type

[SPC]

Maybe that last sentence needs a little more analysis. Shares issued at a value higher than NAV come at a price to the acquirer higher than if they were issued at NAV value. I.e the fund is paying you a bonus to take them above net value -referring to the underlying assets. The fund has to issue new shares from previous on market purchases or new issues.
DRP issued shares are discounted by 3% to the weighted average trading price over 5 days following ex div.
Can't see this adding to NAV which relates to the underlying assets rather than the head share price.
Right or wrong....?

[alokdhir]

Maybe that last sentence needs a little more analysis. Shares issued at a value higher than NAV come at a price to the acquirer higher than if they were issued at NAV value. I.e the fund is paying you a bonus to take them above net value -referring to the underlying assets. The fund has to issue new shares from previous on market purchases or new issues.
DRP issued shares are discounted by 3% to the weighted average trading price over 5 days following ex div.
Can't see this adding to NAV which relates to the underlying assets rather than the head share price.
Right or wrong....?

If shares issued at higher then NAV then it boosts the NAV of the whole lot ...same reason why warrant exercising at less then current NAV ( this has been the case for every warrant conversion ) brings down the NAV of the whole lot ...so called dilution effect of warrants converted to shares under NAV price

Why it adds as these days DRP price is much higher then current NAV so new DRP shares get issued above current NAV so it boosts the older NAV marginally

Example ...last DRP price of KFL 1.8421 ...NAV was 1.7863

[Beagle]

Quite a few opined recently that a ~ 35% premium to NTA for MLN and BRM is nuts or words to that effect. I'd like to disagree because of their well above benchmark average performance in recent years. Alas, I cannot disagree with good conscience. I think there is a desperate scramble for tax free yield and a lot of elderly investors have put their faith in Fisher funds without realizing the implications of what investing at a ~ 35% premium to NTA does to future likely returns.

I'm not buying into this irrationality and if the warrants are not priced sensibly I won't be a buyer. I see fair value (taking into account all the attractive features of Marlin's structure and the excellent skills of their investment team) at 12 cents...if its more than that i will sit on the sidelines like a patient puppy looking for a more opportune time for a feed. I am 99% sure my patience will be tested and am well prepared for that.

[alokdhir]

Quite a few opined recently that a ~ 35% premium to NTA for MLN and BRM is nuts or words to that effect. I'd like to disagree because of their well above benchmark average performance in recent years. Alas, I cannot disagree with good conscience. I think there is a desperate scramble for tax free yield and a lot of elderly investors have put their faith in Fisher funds without realizing the implications of what investing at a ~ 35% premium to NTA does to future likely returns.

I'm not buying into this irrationality and if the warrants are not priced sensibly I won't be a buyer. I see fair value (taking into account all the attractive features of Marlin's structure and the excellent skills of their investment team) at 12 cents...if its more than that i will sit on the sidelines like a patient puppy looking for a more opportune time for a feed. I am 99% sure my patience will be tested and am well prepared for that.

12 cents is right price for me also ...agree with u ...it means u think NAV will be close to or over 130 when exercising time comes in 12 months ...thats a market call also over a year horizon . So if u buy warrants around 12 cents then final MLN price will be 118 + 12 = 130 ...very close to NAV after a year ...so will make it a good buy .

Need wait for such price to come ....year is a long time ...many ups and downs possible

But wont happen soon seeing how the markets trending ...

Also keep in view that MLN portfolio is unhedged so NZD appreciation hurts its NAV and NZD is trending up ...

[winner69]

Also keep in view that MLN portfolio is unhedged so NZD appreciation hurts its NAV and NZD is trending up ...

...but it’s benchmark is 50% hedged ...hmmm

[alokdhir]

...but it’s benchmark is 50% hedged ...hmmm

My bad ...stand corrected W69 must be right :t_up:

still 50% can hurt if NZD appreciated 5% in a year ...very possible

[winner69]

My bad ...stand corrected W69 must be right :t_up:

still 50% can hurt if NZD appreciated 5% in a year ...very possible

I don't know if fund actually hedged - just saw benchmark is 50% hedged

[Beagle]

Had a chat a while back with Wayne Burns corporate manager for the Fisher group who confirmed that forward cover is entirely at the discretion of the investment team and changes from time to time.

Had a chat with Alistair Ryan the Chairman after the Barramundi annual meeting last year and he told me most shareholders really like the regular warrant issues.
There was a really positive atmosphere at that 2020 meeting after a 19% market outperformance by Barramundi that year !!

[alokdhir]

I don't know if fund actually hedged - just saw benchmark is 50% hedged

I also checked ...maybe just benchmark hedged ....no where mentioned about portfolio

[alokdhir]

First trade @ 0.228 cents ....

[Biscuit]

First trade @ 0.228 cents ....

Technically, 22.8 cents.

[alokdhir]

Technically, 22.8 cents.

So right ...My bad :eek2:

[Beagle]

Might be quite a while before these get to my fair valuehttps://www.bing.com/images/search?view=detailV2&ccid=t%2fp%2bTIl0&id=8765B732053AFE63E497CDAFDDB8A7D02404919F&thid=OIP.t_p-TIl0vPDzKK6l5nv3igHaFj&mediaurl=https%3a%2f%2fpreview.redd.it%2f44j63tfrg ue31.jpg%3fwidth%3d960%26crop%3dsmart%26auto%3dweb p%26s%3dbf98ce0a61bd8044176ad5c32c27efe27610e3a1&cdnurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fRb7fa 7e4c8974bcf0f328aea5e67bf78a%3frik%3dn5EEJNCnuN2vz Q%26pid%3dImgRaw&exph=720&expw=960&q=beagle+covering+his+ears&simid=608026829288834217&ck=EB52CA869629569C2AD2A28804EBC442&selectedIndex=0&FORM=IRPRST&idpp=overlayview&ajaxhist=0&ajaxserp=0

[Biscuit]

22 cents is pretty much the difference between the exercise price and the current MLN sp, which makes them a bit overpriced doesn't it?

[alokdhir]

22 cents is pretty much the difference between the exercise price and the current MLN sp, which makes them a bit overpriced doesn't it?


Yes ...right price should be some cents below current SP after deducting 4 dividends ...so 1.28 + 15 -18 should be less then current SP

Below 15 cents is reasonable buy .

Market took SP of MLN up 15-20 cents to get 1/4 FOC warrants ...that trade makes it worth 50-70 cents ...lol

Now also its 10 cents below ex warrant date ..that makes warrant worth 40 cents ...over exuberance :cool:

[FatTed]

Yes ...right price should be some cents below current SP after deducting 4 dividends ...so 1.28 + 15 -18 should be less then current SP

Below 15 cents is reasonable buy .

Market took SP of MLN up 15-20 cents to get 1/4 FOC warrants ...that trade makes it worth 50-70 cents ...lol

Now also its 10 cents below ex warrant date ..that makes warrant worth 40 cents ...over exuberance :cool:

When i log into ASB shares i can not seem to find the MLNWE, 22 cents too rich for me

[alokdhir]

When i log into ASB shares i can not seem to find the MLNWE, 22 cents too rich for me

They are yet to wake up to new listing today :p

[enzed staffy]

ASB - put the code - MLNWE in the search box and select NZ - its been there since at least 10am this morning showing pricing

[alokdhir]

ASB - put the code - MLNWE in the search box and select NZ - its been there since at least 10am this morning showing pricing

Mine as well as of FatTed didn't work ...its working now though

[FatTed]

Mine as well as of FatTed didn't work ...its working now though

I typed MLNWE in the search box, nothing comes up in the usual drop down menu, but if you just press return it comes up. Didn't miss anything as I think the price is too high

[Biscuit]

...... I think the price is too high

But if MLN keeps going up at anything like the rate its been going for the last couple of years, they are cheap, cheap, cheap. They are a straight gamble on where the MLN sp is going to go. They are either worth nothing, something or a lot. There is no way to price them.

[Snow Leopard]

...They are either worth nothing, something or a lot. There is no way to price them.

and it is called the Black-Scholes model.
Merton & Scholes got a Nobel prize cos the model is so good at pricing this stuff and LTCM had not 'happened' then.

[Biscuit]

and it is called the Black-Scholes model.
Merton & Scholes got a Nobel prize cos the model is so good at pricing this stuff and LTCM had not 'happened' then.


Well, that's very true. I used an online Black-Scholes calculator to work out the price, assuming 15% annual volatility and it came out at 23.74 cents. So the market not far off, but I only guessed the volatility. Seems a bit unfair Merton and Scholes got the Nobel, what about poor old Black?

[FatTed]

Well, that's very true. I used an online Black-Scholes calculator to work out the price, assuming 15% annual volatility and it came out at 23.74 cents. So the market not far off, but I only guessed the volatility. Seems a bit unfair Merton and Scholes got the Nobel, what about poor old Black?

But the SP is 20% premium to NAV, what happens if you use NAV in your calculations?

[alokdhir]

Why MLNWE has buyers much above its intrinsic value as per todays NAV as well SP ...its got much to do with people taking a call on markets after 12 months ...they expect to have roaring markets in 2022 ...its the cheapest way to play that call ...24 cents ...means getting a MLN share at 1.42 in May 2022 so seems worthwhile to many and doesn't involve too much funding too ...sell MLN and buy 6 MLNWE is the get rich quick play ...:D

[teabag]

Seems a bit unfair Merton and Scholes got the Nobel, what about poor old Black?
Poor old Black died in 1995, Merton and Scholes got ennobled in 1997. They don't give nobles posthumously.

[Beagle]

But the SP is 20% premium to NAV, what happens if you use NAV in your calculations?

I took one look at this and slunk back into my dog kennel thinking some things are too hard https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/black-scholes-merton-model/
Happy to stick with my super accurate Beagle nose that seldom fails to give a wrong answer which says go and hunt for a feed elsewhere unless these are around 12 cents per dog bisket.

[younga]

MLNWE at 29.5 cents. Heads at 1.60. exercise price is 1.28. Dividend was around 2 cents, so that gives a theoretical price of 34 cents so a small bit to be made by arbitrage. Invests in US equities.