Kflwh

[ronaldson]

Well, on-market trading is live now. Bidders (including me) at $0.07, seller at $0.15.

So where to now?

[winner69]

Well, on-market trading is live now. Bidders (including me) at $0.07, seller at $0.15.

So where to now?

You are about as bad as those guys who made an offer for ERD …opportunistic

But buying allows that eh …nobody has to sell.

[ronaldson]

There you are. First trade at $0.10 at 10.19am. The action, albeit subdued, has started.

[Rawz]

There you are. First trade at $0.10 at 10.19am. The action, albeit subdued, has started.
looks like i got them. 182,500 to go

[winner69]

looks like i got them. 182,500 to go

Well done rawz

You might even get lucky with a few more super cheap ones

[Rawz]

well i got 70,000 at an average price of $0.127. cost me $8,947.90 inc brokage. happy with that

[ronaldson]

Well done rawz. I am bidding for 200k at $0.105 presently. I don't think the main early volume on the sell side will come to the market until next week when holders have had their statement from Computershare showing yesterdays allotment. But we are underway.

I see the KFL AGM Notice has circulated today. 10.30am on Friday 4 August in Guineas Room 1 at Ellerslie Racecourse. As a regular past attendee I can say that in my view the Board invariably puts on the best luncheon spread of any NZX listed entity that I am aware, so if you are an Aucklander then choose in person rather than online if only for that reason. If I remember, I will wear a " Ronaldson Trust " name tag with my name beneath, so would be happy to chat with any other forum posters or readers present on that occasion.

[Rawz]

I bought another 90,000 at $0.123.

I think this is very good value

[Rawz]

its better to own these warrants than the head shares right now? what's going on...?

[alokdhir]

I bought another 90,000 at $0.123.

I think this is very good value

Agree with u mate ...its very worth a punt ...U may triple your money in 12 months ...:t_up:

[Rawz]

Well done rawz. I am bidding for 200k at $0.105 presently. I don't think the main early volume on the sell side will come to the market until next week when holders have had their statement from Computershare showing yesterdays allotment. But we are underway.



That's interesting and could well be true. I figured the early sells would be when you pick up the best value, as these are the people that had made up their mind from first announcement of the issue that they would sell.. and they would sell at what ever the price is with no science behind it. Any future sellers would be looking to get true value out of these which I figure is well north of these prices. just my thoughts anyway

[justakiwi]

.................

[Forrestdun]

Both ASB and Sharsies don’t yet seem to have the instrument loaded into there system to allow trading. This could lead to more sellers when it goes live.

[alokdhir]

Both ASB and Sharsies don’t yet seem to have the instrument loaded into there system to allow trading. This could lead to more sellers when it goes live.

ASB has ...try searching KFLHW on NZX exchange ...it will show ...Mine is showing ...need put NZX on then it shows

[Onemootpoint]

Both ASB and Sharsies don’t yet seem to have the instrument loaded into there system to allow trading. This could lead to more sellers when it goes live.

It is on ASB.
KFLHW

[winner69]

Back to the 10’s

[777]

Sounds like ASB have stuffed it up. It is KFLWH.

[alokdhir]

Back to the 10’s

Bring your big bucks mate :p

[Rawz]

Back to the 10’s


Bring your big bucks mate :p

Yeah come on winner my holdings say im down 20% lol...

Is it just me or is it almost unbelieve to see the SP at this level?

well maybe not for ronaldson he called it correct parking up at 10cent range

Rawz got too excited :scared:

[alokdhir]

Yeah come on winner my holdings say im down 20% lol...

Is it just me or is it almost unbelieve to see the SP at this level?

well maybe not for ronaldson he called it correct parking up at 10cent range

Rawz got too excited :scared:

Nothing much to worry ...U can average down ...Its bad day for the markets and on top of that its Friday when all looking to sell and go to Pub :D

[Onemootpoint]

It is on ASB.
KFLHW

My bad. Forgot how to spell.

should be:

KFLWH

[bull....]

.16c is my guestimate of value at today

[SPC]

I estimated 8c a few weeks back and the volume weighted price for the day came in a 10.9. Fairly close. Wouldn't pay it much further attention until next year from here.

[ronaldson]

Yes, I did get 200k at $0.105 today and the market closed marginally lower with no volume impetus on the buy side any longer.

But this has over a year to run now. There is certainly downside risk but over that timeframe, and in comparison, the upside potential is far greater. Even a change of Government might give the market some wings notwithstanding the bite of interest rates. And even though a 1c move is $2k for me one shouldn't sweat small moves, which are essentially meaningless just now.

I am sure rawz will be fine in due course. There will be sophisticated investors out there who will be capable of modelling how it is and they will keep a floor under the price from this point.

And with over 83m warrants on issue there will be plenty for everyone who wants them. We may see next week how tightly they are held. Given a reasonable price is available immediately I expect selling pressure to predominate over that period. Note that the on-market price is more than the sum of three quarterly dividend payments for those that sell so quite a few will be tempted. Regular warrant issues are a major "hidden" benefit for holders and usually tax free for non traders.

[alokdhir]

I estimated 8c a few weeks back and the volume weighted price for the day came in a 10.9. Fairly close. Wouldn't pay it much further attention until next year from here.

Only 30% above estimate ...but not too much I wud agree lol :p

[Rawz]

If it goes to 8c I’ll average down once. Otherwise I’ll hold my 12.5 cents avg price until Feb next year and reevaluate then

[alokdhir]

If it goes to 8c I’ll average down once. Otherwise I’ll hold my 12.5 cents avg price until Feb next year and reevaluate then

Good idea ...that will bring your average around Ronalson's 10.5 buy ....Will be very fleeting 8 cents if at all ...but one can never know till one finds it

[bull....]

sound out first thin this morning ... good luck holders

[SPC]

Is that a 'kofefe' moment Bull?

[bull....]

Is that a 'kofefe' moment Bull?

i relized i made a mistake on my calc i thought it was .16 for value of warrant it was in fact .065 - .07 based on my calc's ... my bad i lost some profit by not selling first day

[winner69]

Still some hopeful buyers down at 5 cents/6 cents

[ronaldson]

Looks like rawz and I were a bit too keen to get on board the train by bidding early, as it seems we could have entered more cheaply. Definitely not the first time I have erred in that regard and no doubt won't be the last either. But holders have now had their email statements from Computershare showing their KFLWH allotment so I still think this week is maximum selling pressure in the near term, and it seems to have settled at $0.08 as a floor. And rawz can double down as he suggested and will probably have a net entry price lower than mine by now.

Today's announcement by IFT has done no harm and will provide a small boost the next KFL NAV advice.

[dabsman]

Just bought some at 7.5c. I dont have many KFL but got some warrants so added to these. I think will be pretty easy to double your money on these from here - maybe triple

[winner69]

Just bought some at 7.5c. I dont have many KFL but got some warrants so added to these. I think will be pretty easy to double your money on these from here - maybe triple

Doesn’t take much to quadruple your money (maybe even more) from here either

Go KFL

[ValueNZ]

Doesn’t take much to quadruple your money (maybe even more) from here either

Go KFL

Also doesn't take much to have a 100% loss with warrants.

[mike2020]

If these warrants are a fail at due date imagine the carnage we will be seeing on the nzx.

[alokdhir]

If these warrants are a fail at due date imagine the carnage we will be seeing on the nzx.

Hard to imagine ....IMHO they will not fail rather they will reward investors handsomely ....but it will take some doing to change sentiment on NZX ...maybe election results or interest rate scenario ...lots can happen in 13 months ahead . Fact is .. we are at or near top of rates now ...soon we will be over the hump ...then hard to stop stocks ...people will be chasing warrants in few months ahead ...hopefully ...:D

[60yearsold]

Also doesn't take much to have a 100% loss with warrants.

Last Fisher/Barramundi warrant issue were worthless at the end.

[Sampan]

Personally I cant see the value in these things from a risk reward perspective and I couldn't believe the level they traded at on Friday but a sense of realism has thankfully entered the market. These will trade far lower this year

[Rawz]

Personally I cant see the value in these things from a risk reward perspective and I couldn't believe the level they traded at on Friday but a sense of realism has thankfully entered the market. These will trade far lower this year

Currently the guestimate exercise price + warrant price is < KFL SP today. (which is < than nav)

You must be thinking the market is in for a big pullback? And no doubt you have positioned yourself accordingly

[mshierlaw]

Currently the guestimate exercise price + warrant price is < KFL SP today. (which is < than nav)

You must be thinking the market is in for a big pullback? And no doubt you have positioned yourself accordingly

My crystal ball has never worked, but based on todays prices and historical dividends.....

Head shares $1.35 with expected 11c dividend before warrant excise date = net cost $1.24
Warrant 7c + expected excise price $1.26 = net cost $ 1.37

Note net cost is at excise date
If dividends change both lines same amount.
If share price goes up warrants look much better.
Fees are significant unless your buying by the truckload. Not my style.

I will exercise my allocation if it makes sense at the time & look at buying some more head shares.

[alokdhir]

All holders were allocated 1 for 4 KFL shares held, warrants KFLWH ...which some are assuming to be free and ready to sell at any price ...

In fact these are insurance against future dilution in NAV of their held KFL head shares .

Only in case of they going worthless ie market SP of KFL on 26th July 2024 is less then offer or exercise price of around $ 1.25 / 26 they will be better off then the holders who held on to their warrants till last month to see what effect they may have on NAV of their held KFL shares .

It seems many are taking a bearish view of markets 13 months hence are happy to sell at current prices ....if markets do some recovery and NAV dilution is more then what price they are getting now then they will be losers as their KFLs nav will get more diluted then what they got out of current sales of warrants .

Maybe many dont understand the final mechanisms of these warrants when they get exercised .

If view is that KFL sp will be below exercise price thus no dilution will happen then ONLY selling them at any price makes sense but if by any chance dilution is more then proceeds of the warrant sale then its a loosing proposition ...at current price of 7 cents ...it covers dilution of less then 2 cents !!

[ronaldson]

All holders were allocated 1 for 4 KFL shares held, warrants KFLWH ...which some are assuming to be free and ready to sell at any price ...

In fact these are insurance against future dilution in NAV of their held KFL head shares .

Only in case of they going worthless ie market SP of KFL on 26th July 2024 is less then offer or exercise price of around $ 1.25 / 26 they will be better off then the holders who held on to their warrants till last month to see what effect they may have on NAV of their held KFL shares .

It seems many are taking a bearish view of markets 13 months hence are happy to sell at current prices ....if markets do some recovery and NAV dilution is more then what price they are getting now then they will be losers as their KFLs nav will get more diluted then what they got out of current sales of warrants .

Maybe many dont understand the final mechanisms of these warrants when they get exercised .

If view is that KFL sp will be below exercise price thus no dilution will happen then ONLY selling them at any price makes sense but if by any chance dilution is more then proceeds of the warrant sale then its a loosing proposition ...at current price of 7 cents ...it covers dilution of less then 2 cents !!

Maybe, but many holders of KFL are simply interested in income derived. For them selling is a windfall. And many will also not wish to find the $1.25 exercise price so quitting is logical especially when the alternative of continuing to hold is essentially an ongoing gamble against Mr Market.

[mshierlaw]

Maybe, but many holders of KFL are simply interested in income derived. For them selling is a windfall. And many will also not wish to find the $1.25 exercise price so quitting is logical especially when the alternative of continuing to hold is essentially an ongoing gamble against Mr Market.

If I sell my warrants at today's price my current fee structure will eat up 15.5 % of their current value.

DISC not a large holder of this share.

[bull....]

Maybe, but many holders of KFL are simply interested in income derived. For them selling is a windfall. And many will also not wish to find the $1.25 exercise price so quitting is logical especially when the alternative of continuing to hold is essentially an ongoing gamble against Mr Market.

exactly my sentiment.

Anyway i see it as also you have a company that earns roughly 9 mil in income but pays out 30 mil in expense therefore no wonder the stock price is not moving up as they have to keep selling there assets to fund dividend's and there fee's

lose lose for investors unless there portfolio go'es berserk on the upside and that's the punt you have to work out how much the portfolio need go up to cover the expense's and hence stop the continual fall in nav due to cash leaving the business

anyway i view the warrant issue as an attempt to get new capital to then pay it back to you as div's if the status of things remain the same

[alokdhir]

Maybe, but many holders of KFL are simply interested in income derived. For them selling is a windfall. And many will also not wish to find the $1.25 exercise price so quitting is logical especially when the alternative of continuing to hold is essentially an ongoing gamble against Mr Market.

If u buy Insurance then U always have choice to be " Uninsured " and save the premium and take your chances ...thats what is Warrant to KFL share holders ...Insurance against depletion of capital ie NAV ...

Short term thinking or lack of understanding of its mechanics can lead people to think they are better off selling them ...but chances are very bright they will be the ones financing subsidised purchases of others in KFL when they get exercised in July 2024

If people hold KFL as term deposit for regular income then exercise of warrants in future can lead to depletion of capital out of your term deposit ...thats why one need to hold them till close to expiry as insurance against your interest in KFL ....best case is to exercise them by bringing more funds to keep your original capital safe ...small gains possible as not all get exercised ...or if one cant bring new funds then hold till last month by when a clear picture would have emerged how much depletion will happen and one can sell at similar price in market at that time to recover that capital erosion due to forth coming exercise .

Selling now one is speculating that market will not recover etc ...like one can speculate no earthquake will come etc thus no need insurance

So imo its not choice of warrant holders to sell now ...its their speculation or lack of understanding what happens when they get exercised at say $ 1.25 when NAV is say $ 1.60 ...the sellers now will be financing the difference in nav of new purchasers ...as they will be getting KFL of nav $ 1.53 at $ 1.25 ...if one had sold at say 7 cents currently then he looses 7cents - 1.75 cents he gets now = 5.25 cents net loss per KFL possible ...as dividend / income is based on nav thus his income will also drop ...so he cant offer this excuse too ...its like capital of term deposit getting reduced thus will its income

[winner69]

If u buy Insurance then U always have choice to be " Uninsured " and save the premium and take your chances ...thats what is Warrant to KFL share holders ...Insurance against depletion of capital ie NAV ...

Short term thinking or lack of understanding of its mechanics can lead people to think they are better off selling them ...but chances are very bright they will be the ones financing subsidised purchases of others in KFL when they get exercised in July 2024

If people hold KFL as term deposit for regular income then exercise of warrants in future can lead to depletion of capital out of your term deposit ...thats why one need to hold them till close to expiry as insurance against your interest in KFL ....best case is to exercise them by bringing more funds to keep your original capital safe ...small gains possible as not all get exercised ...or if one cant bring new funds then hold till last month by when a clear picture would have emerged how much depletion will happen and one can sell at similar price in market at that time to recover that capital erosion due to forth coming exercise .

Selling now one is speculating that market will not recover etc ...like one can speculate no earthquake will come etc thus no need insurance

So imo its not choice of warrant holders to sell now ...its their speculation or lack of understanding what happens when they get exercised at say $ 1.25 when NAV is say $ 1.60 ...the sellers will be financing the difference in nav of new purchasers ...as they will be getting KFL of nav $ 1.53 at $ 1.25 ...if one had sold at say 7 cents currently then he looses 7cents - 1.75 cents he gets now = 5.25 cents net loss per KFL possible ...as dividend / income is based on nav thus his income will also drop ...so he cant offer this excuse too ...its like capital of term deposit getting reduced thus will its income

It is very s complicated eh alokdhir …..seems a heck a lot of financial engineering going on ….no wonder Directors want a pay rise

You didn’t factor in what management fees will be over the next year

[alokdhir]

It is very s complicated eh alokdhir …..seems a heck a lot of financial engineering going on ….no wonder Directors want a pay rise

You didn’t factor in what management fees will be over the next year

That is already written ...can be more if they perform better than expected ...that no one grudges ....if u do well then u get paid more

PS : Was just trying to explain the NEED to hold them till maturity if u plan to hold KFL ...... Otherwise one can end up making someone else RICH

Like KFLWF series someone sold at 3 cents and near maturity they were worth 45 Cents ...he lost 9.75 Cents of NAV of his KFL

[winner69]

KFL share price value (in theory) is NAV less present value of future management fees

[alokdhir]

KFL share price value (in theory) is NAV less present value of future management fees

In normal times ...11% premium cant be explained in that manner ...so it has element of market sentiment also imbibed

[mike2020]

F was good. Around 6 months after issue everyone nodded off. I am absolutely counting on it this time. Give us a couple of lazy .25s from Adrian and a gloomy Christmas and Bob's your uncle. Roll on summer.

[alokdhir]

Is selling over ...6.5 Cents bottom ??

[percy]

I no longer hold any EBO,FPH,MFT,IFT,DGL,CEN or MEL...
To have an interest in the above shares I bought 25,000 KFLWHs this morning at 6.9 cents. 6.9 cents [$1,755] seems to be a good price to control $1.41 of nta [$35,250].
If those excellent shares continue to perform and KFL share price reflects their performance I will hopefully be well in the money.

[alokdhir]

I no longer hold any EBO,FPH,MFT,IFT,DGL,CEN or MEL...
To have an interest in the above shares I bought 25,000 KFLWHs this morning at 6.9 cents. 6.9 cents [$1,755] seems to be a good price to control $1.41 of nta [$35,250].
If those excellent shares continue to perform and KFL share price reflects their performance I will hopefully be well in the money.

Smart money is thinking wisely and longer term and buying ...then who are the sellers ?? :p

[Snow Leopard]

Smart money is thinking wisely and longer term and buying ...then who are the sellers ?? :p

Smarter money :p

[ronaldson]

If I sell my warrants at today's price my current fee structure will eat up 15.5 % of their current value.

DISC not a large holder of this share.

You are right. For example Jarden are at $29.90 for any NZ trade up to $15k in value. When you are dealing with a small/ish parcel of warrants valued at, currently, $0.07 each then you need around 500 to get any real cash in hand at all and probably many times that to make it worthwhile to trade. Considering the warrants were issued at 1 for every 4 head shares in the first place a great many small retail holders will be even worse off that your 15.5% of their value if they go on-market.

Does anybody think KFL should make a special arrangement with a broker or brokers to cover this circumstance off?

In fact the AGM is coming up and if I am in attendance and remember (a bit doubtful at my age) I will make this point to the Chair/Board on that occasion.

[SPC]

Surely the answer is to look for a cheaper platform ie. Sharesies?.
Obviously many do looking at the volumes of only a few trading per transaction.
You can also trade shares privately using the appropriate forms
The KFL board will give this answer, nothing they could or should do on this matter.

[alokdhir]

Smarter money :p

Time will tell who were smarter ....at present all can proclaim to be the smartest ... 13 months marathon not week's sprint :D

[bull....]

yep the smartest one's are the KFL people who milk shareholder's every yr with huge fee's and bonus's

[ronaldson]

Seems like the warrant price floor is fairly solid presently at $0.075. Head shares trying to go above $1.35 without success just now.

[whatsup]

2.7 atm, looks like the bottom is in with very thin trading, definately not a BRMWH imo.

[ronaldson]

I capitulated this morning at an average $0.0234. Worst trade ever, since acquired the large parcel at $0.105 soon after trading in these warrants began.

Hope that was the right decision since the original purchase clearly wasn't from the brightest bulb in the room!

[SPC]

Ouch but I'm holding on. I have seen things turn around quickly on previous experience and wished I'd kept some warrants that I had sold. But obviously head shares are at a great price currently and warrants may seem pointless. Time will tell.
Good on you for fessing up in your hour of shame 😉

[Rawz]

I think these are undervalued.

I ran the Black-Scholes method of valuing these options and it gave me a value of $0.32 cents. Must have buggered up the inputs aye

[alokdhir]

I think these are undervalued.

I ran the Black-Scholes method of valuing these options and it gave me a value of $0.32 cents. Must have buggered up the inputs aye

Have more faith. in yourself buddy ...U r spot on ...they are undervalued ...also they will be around 10 Cents + in July if things pan out like I think they are going at present ...RBNZ wud have done its first 50 bips cut by then ...fingers crossed

[alokdhir]

Someone thinks it's worth a punt now ...big buyer @ 2.5 cents ....surely undervalued at these levels ... current NAV tad over $ 1.323 ....exercise price $ 1.26 ....with positive outlook ahead ...next 6 months can easily make this multi bagger ...imo ...DYOR

[percy]

Someone thinks it's worth a punt now ...big buyer @ 2.5 cents ....surely undervalued at these levels ... current NAV tad over $ 1.323 ....exercise price $ 1.26 ....with positive outlook ahead ...next 6 months can easily make this multi bagger ...imo ...DYOR

Help me please.
I thought they converted at $1.37./?

[alokdhir]

Help me please.
I thought they converted at $1.37./?

$ 1.37 minus the 4 dividends of appox 11 cents ...thus final exercise price will come to $ 1.26 ...though it will be confirmed just few weeks before the exercise date

[percy]

$ 1.37 minus the 4 dividends of appox 11 cents ...thus final exercise price will come to $ 1.26 ...though it will be confirmed just few weeks before the exercise date

Thanks,
That's excellent news.[for me].

[alokdhir]

"Each warrant gives shareholders the right, but not the obligation, to subscribe for one additional ordinary share in Kingfish on the exercise date. The exercise date is 26 July 2024.
The exercise price will be $1.37 less any dividends declared with a record date during the period commencing on the date of allotment of the warrants and up to the announcement of the final exercise price. The final exercise price will be calculated and advised to warrant holders at least six weeks before the exercise date."

Operational word being LESS ie $ 1.37 less four dividends of 11 cents or so ...making final exercise price to be $ 1.26 ...most likely and probable

[Rawz]

Thanks,
That's excellent news.[for me].

And me lol

[Not too Flash]

Bit of interest this morning ......

[Rawz]

Someone thinks it's worth a punt now ...big buyer @ 2.5 cents ....surely undervalued at these levels ... current NAV tad over $ 1.323 ....exercise price $ 1.26 ....with positive outlook ahead ...next 6 months can easily make this multi bagger ...imo ...DYOR

If the NAV increase 5% from now until warrant exercise date we are looking at $1.38.. and then if rates are dropping the SP could again trade at a surplus to NAV, let’s say 4%.. this would mean the SP could be $1.44 ish come exercise date.

It’s not outrageous to say the warrants could trade at 15cents+ later this year

[Ricky-bobby]

I jumped in this morning. Have done really well with the brm warrants, so thought I would have a go at these as well!

[alokdhir]

If the NAV increase 5% from now until warrant exercise date we are looking at $1.38.. and then if rates are dropping the SP could again trade at a surplus to NAV, let’s say 4%.. this would mean the SP could be $1.44 ish come exercise date.

It’s not outrageous to say the warrants could trade at 15cents+ later this year


Thats is being too optimistic ...but close to 7-10 cents range is easily possible ...still from current levels its big jump . If u get lucky and markets go crazy then best case scenario of 15 cents ...not my base case ...super bullish case ...but yes probable ...20% chance ....imo

Also I need keep reminding KFL investors that since 2004 it listed ...its only traded at premium only once ie after covid boom ...so that was one off ...not easy to replicate in near future ...again just my view

[Toddy]

I jumped in this morning. Have done really well with the brm warrants, so thought I would have a go at these as well!

It's a good bet if you have the capital to exercise the warrents if necessary. This way you can make use of the full period and not worry about the volatility in the last 3 months before maturity.

[777]

Scenario 1

Buy warrant for .029c. Exercise for 1.26. Total cost for a share in 28 weeks 1.289

Scenario 2

Sell warrant for 2.9c. Buy share now for 1.24. Net cost 1.211. Receive two dividends 5.6c. Total cost 1.155.

Sold all mine yesterday at 3.4c average.

[SPC]

Congratulations, you've worked it out ;).
This manoeuvre has been strategy for all 3 over an extended period now.
I've hinted previously in posts on 'exercising warrants' early.

[BigBob]

In scenario 2 you presumably bought the warrants at some stage too..? Or are you just talking about the "freebies"..?

[777]

In scenario 2 you presumably bought the warrants at some stage too..? Or are you just talking about the "freebies"..?

Good point. Those that have paid for a warrant would have to allow for that but the maths still point to buying the head share now versus the warrant if you were looking at getting the share.

Trading in the warrants may be the aim in which case the above does not apply. The main thing is not to end up with a pile of warrants that you cannot exercise due to lack of funds and can't sell because of lack of buyers at the end.

[Rawz]

Warrants are quite something. I’ve seen some on an ASX stock I’ve been following go from 1cent to 22cents and now back to 1cent in the space of 8weeks. Amazing if you get it right but no so much if not lol

[Sideshow Bob]

Warrants are quite something. I’ve seen some on an ASX stock I’ve been following go from 1cent to 22cents and now back to 1cent in the space of 8weeks. Amazing if you get it right but no so much if not lol

I think way way back many years ago on ST, one poster had bought something like $5k or $10k of options in a highly speccy ASX listed mining operation at $0.001 each.

Turned it into $1m.

Someone might remember better than me.....

[alokdhir]

Scenario 1

Buy warrant for .029c. Exercise for 1.26. Total cost for a share in 28 weeks 1.289

Scenario 2

Sell warrant for 2.9c. Buy share now for 1.24. Net cost 1.211. Receive two dividends 5.6c. Total cost 1.155.

Sold all mine yesterday at 3.4c average.

Selling your free or original issued warrants for any amount before the exercise date opens one to loss of nav on the head shares when they get exercised in July ...U sold warrant for 3.4 cents so u have a cushion of 3.4 / 4 cents NAV reduction on your head shares ...if that difference is more then U end up loosing value ...eg if the NAV on exercise date is say $ 1.45 and exercise price is $ 1.26 ...then NAV reduction based on 90% warrant exercise is 0.9x (1.45-1.26 )/4 = 4.275 cents ...while u had a cushion of 3.4/4 only ...thus your all head shares lost almost 3.425 cents of NAV value ...future divs are based on diluted NAV after exercise .

As I mentioned in my earlier post that selling warrants out of original free allotments is taking a CALL on the market ...as warrants are not actually free but offered as insurance to original holders towards future NAV reduction ...best strategy for free warrants is to hold them till at least last few weeks. when the final scene becomes clearer ...its too early for that ...if NZX50G goes up 10% ...then KFL NAV can go up 12-13% ahead thus warrants will become dearer to account for subsequent loss to NAV at exercise ...present 0.85 cents gain can easily become 4 cents loss in 6 months

If u had bought equal numbered KFL head shares presently then its a covered transaction and has additional 3.4 + 2 cents value attached minus the interest cost of funds for 28 weeks ...but not many can come up with 25% extra head shares funds ...they need hold warrants till the end !!

[winner69]

I’m sure you understand what you’ve just posted alokdhir …got me stuffed though….maybe it’s too hot today to digest

[alokdhir]

I’m sure you understand what you’ve just posted alokdhir …got me stuffed though….maybe it’s too hot today to digest

Warrants are very tricky stuff as too many combinations and permutations ...777 sold his warrants and presumably bought equal number KFL ...in fact exercising his warrants earlier then July ....got benefit of present warrant SP as head price is less then future exercise price ...unlike BRM

But if one person say like me ...who dont have funds to exercise ...that person needs hold warrant till end 2-3 weeks then sell in the market to make up for the loss of nav dilution to his head shares ...if done earlier then actual scene can change to your disadvantage or advantage ...my main point .

Warrants are not for the benefit of head holders ...their main purpose is to increase corpus thus fund charges ...but still we can protect ourselves by not doing speculative selling too early

[777]

I haven't and won't be replacing my warrants with head shares as I have far too many now. I wasn't going to be able to exercise my warrants and did not expect to get rid of them close to the exercise date due to the number I had, so with big buyers in yesterday I took advantage of them to sell.

I must admit I am with w69 here. Must have read your post three times and still little the wiser but then I don't go too deep into theory on share values.

[alokdhir]

I haven't and won't be replacing my warrants with head shares as I have far too many now. I wasn't going to be able to exercise my warrants and did not expect to get rid of them close to the exercise date due to the number I had, so with big buyers in yesterday I took advantage of them to sell.

I must admit I am with w69 here. Must have read your post three times and still little the wiser but then I don't go too deep into theory on share values.

Ok ...so u just sold your original allotted warrants and did not convert to KFL head shares ...then my second option applies ...ie U have opened yourself to bigger then accounted for NAV reduction at the time of exercise ....U have cashed 0.85 cents per share you have ...but if NAV is more then $ 1.30 at time of exercise then u wud be at a loss by more then what u got now for your warrants ...as that will be NAV reduction loss so wont be on cash flow basis ...hopefully U will understand that ....selling warrants now is like cashing a part of your KFL nav ....if what one cashed out ie what amount one gets by selling warrants now is less then by what amount your holding's nav reduction happen after dilution then one ends loosing net worth .

Maybe the concept is hard to explain but not that hard to understand :p

PS : Also there is always brisk and voluminous trading in warrants at start and END ...easy to sell millions in July 2024 !!!

[winner69]

Alokdhir …..all this talk about NAV reduction whether you buy, sell or exercise seems holders are screwed whstever they do

[alokdhir]

Alokdhir …..all this talk about NAV reduction whether you buy, sell or exercise seems holders are screwed whstever they do

Thats why I said warrants are not for the benefit of holders but for fund managers ...but we still can play them or use them wisely to enhance our net worth by timely transactions ...or just hold them till say mid or early July ...depending on how many u have, then sell ...as near to final exercise date to preserve your head shares net-worth....as NAV dilution takes place after conversion ...if one does nothing then his shares remain in same numbers but their NAV is lesser ...as part of that is gone in subsidising lesser priced new issued shares

[SPC]

Maybe you haven't worked it out yet, but TODAY the market doesn't give a sh.t about the NAV of this stock. It's a share that trades at prices determined by sellers and buyers. Astute buyers will recognise the share is trading TODAY at a significant discount to its underlying value. Sellers will be selling for any number of reasons and have set a sell price acceptable to them. No different to the rest of the NZX offerings.
The warrants are an option to buy the head stock at a future time for a fixed value. That anticipated value is currently above the current selling price TODAY. If you have spare cash TODAY and you believe the stock has a positive outlook then buying TODAY is a reasonable bet. If you also hold warrants then you may also choose to sell an equivalent amount to provide a further discount to your head share purchase cost TODAY. Or you could hold them in the hope they could sell for more later. Or hold them and exercise them at the exercise price. The latter is a personal value decision, I offer no insights. This isn't brain surgery. Buying or selling warrants alone is simply another value based decision. No advice offered.
Conflating the operation of a listed security with the operation of a FUND is where all the nonsense comes in. (To me) KFL is a share. It is not a fund. Technicaly it is called a closed end fund, but in reality the market treats it as a share. So do I. Make your decisions accordingly.
I'm going to leave it there. It's too hot to wrangle this any further. The KFL investment team reading these posts must be in fits of laughter.
PS I've been working with this security for nearly two decades. It's been a great investment, but don't over think it.

[alokdhir]

Maybe some people cant understand simple maths ...then I dont have anything to add more ...

I am a substantial investor is KFL since 2010 and have seen its ups and downs ...many warrant issues ...many people / astute players / investors / traders like Mr B had great time with playing warrants ...they made / make money at the expense of ignorant long term holders who take speculative calls in disposing off either their warrants too soon or too late ...they dont even realise that their KFL 's worth became less after every successful warrants exercise ...even if they are invested for long term ....their dividends are based on current NAV ...if that goes down then dividends goes down ...YES ...number of KFL head shares remain the same ...if that is comfortable for most then I got nothing to say ...lol

[alokdhir]

https://www.nzx.com/announcements/337833 Undiluted NAV before warrants exercise date = $ 1.6555


https://www.nzx.com/announcements/338137. Diluted NAV after warrants conversion = $ 1.6105

If one ignores minor market movement during that week then NAV dropped 4.5 Cents for entire holdings after conversion .

If original holder converted all his freebies ...no effect on his post conversion net worth vis a vis his KFL holdings

If one didn't have money to exercise which most do then he needed to SELL his warrants over 4.5 x 4 = 18 cents to just absorb NAV reduction shock ...if one sold below 18 Cents then he is worse off due to warrants issue and he sold over 18 Cents then he is better off

As at present I do not know what will be KFL NAV in July so I cant realistically take a call what price I need to sell warrants to make up for the NAV loss to my substantial holdings ....thats why I plan to hold them till at least July when the picture will be more clearer .

Selling now is like going naked short on KFL nav value in an up trending market for next 6 months ...thus opening to unlimited losses ...though ones number of KFL shares will remain same as before but that means little ...real net worth for LT investors is number x NAV .

Hopefully this will help understand why original holders should not sell warrants at least till its time value has fully diminished or one can have a better idea of expected NAV reduction from warrants conversion

[Mrbuyit]

I have purchased head share recently at ~ the amount of warrants I was issued, which is easy enough to do because I'm only a small holding, and makes sense to me as this is cheaper than exercising the warrants which we know is going to be around the 1.26-1.27, plus a couple of divs although of course we don't know what future share price will be!

At this stage I'm not yet selling the warrants, i guess this gives me flexibility to either exercise, sell down the track.

I'm still trying to get my head around the likely dilution ratio, as new money will be introduced to purchase at whatever uptake %age of the the head shares when the rights issue takes effect, so is the dilution level just the discount rate and is that referencing current SP or NTA? as we know there can be a decent discount / gap between the two at time. / sorry for noob questions.

[alokdhir]

Current SP is based on many dynamics ...discount can be due to equity negativity or future dilution or just supply / demand mismatch etc ...that no one can figure out .

U buying on market at below expected exercise price is a wise move ...if u expect to. buy more or convert more and have funds NOW then it makes sense to sell warrants and buy head shares now ...proceeds from warrant sale will subsidise your current head share purchase price like 777 illustrated in his post

New money will be introduced at 1.26 ( most likely ) and in July NAV is unknown at present so not easy to estimate future NAV dilution ....normally higher the difference then higher the %age of conversion eg in 2021 ...it was almost 90% as conversion was at substantial discount to NAV

[winner69]

Discount to NAV today mainly the NPV of future fees …of course that discount varies from time to day but a fair proportion of it is fees related

[SPC]

"U buying on market at below expected exercise price is a wise move ...if u expect to. buy more or convert more and have funds NOW then it makes sense to sell warrants and buy head shares now ...proceeds from warrant sale will subsidise your current head share purchase price like 777 illustrated in his post"

Exactly, you've finally clicked.

[Rawz]

SPC, only if you are buying the same number of head shares as warrants you sold.

Not the same as the $ value worth of warrants you sold

[SPC]

No, not necessarily. If you have the funds, now is a good time to accumulate, you have the option of subsidizing your new purchase by selling warrants, or you can hold the warrants on assumption they may rise in value and sell them later.
Too explain my position, generally I'm not that obsessed with warrant issues, unless the maths are compelling. And they haven't always been and I've sold warrants before they became worthless in dud issues. Similarly I haven't historically participated always in DRP issues, and apart from recent issues you would have lost value at times during the market downturn as the share price retracted. Accumulation at the cheapest possible price is how I operate. That's all I am concerned with. I don't care where the shares come from, warrant issues or on market, the cheapest is fine for me.
I never relied solely on warrant issues or DRPs to accumulate. They haven't always been best value. That's the generic approach, I don't follow it.

[Toddy]

What's the point in debating opportunity cost all day long. Might as well go and work for a bank or an investment house.

If the market goes up, everyone wins.

[SPC]

I don't need too. I retired early a decade ago.
This is a forum where people debate and express opinions. Some find it educational, others opine for various reasons.
I assume you do as well.

[percy]

I no longer hold any EBO,FPH,MFT,IFT,DGL,CEN or MEL...
To have an interest in the above shares I bought 25,000 KFLWHs this morning at 6.9 cents. 6.9 cents [$1,755] seems to be a good price to control $1.41 of nta [$35,250].
If those excellent shares continue to perform and KFL share price reflects their performance I will hopefully be well in the money.

The reason I bought these options remains intact.

[Toddy]

Maybe it's because I ran and did accounting of derivatives for years.
The models have their place, especially as the banks loved to s rew everyone.

Debate away.

However, economics 101 and the laws of supply and demand are centuries old and always will drive the market.

[alokdhir]

SPC, only if you are buying the same number of head shares as warrants you sold.

Not the same as the $ value worth of warrants you sold

No need to make those wiser who already think they better then Einstein ...lol

[alokdhir]

Discount to NAV today mainly the NPV of future fees …of course that discount varies from time to day but a fair proportion of it is fees related


Mate I am sure u dont think market thinks Fisher funds charges around 10% per annum for managing KFL portfolio ....discount today is mainly due to equity negativity and demand supply mismatch ...fund charges are less then 1% of NAV ...:cool:

[winner69]

Mate I am sure u dont think market thinks Fisher funds charges around 10% per annum for managing KFL portfolio ....discount today is mainly due to equity negativity and demand supply mismatch ...fund charges are less then 1% of NAV ...:cool:

.....all future fees ......this year's fee plus next years fee etc etc etc

[alokdhir]

.....all future fees ......this year's fee plus next years fee etc etc etc

Why one need to account for so many years of fund charges ...then one should account for many many years of growth ahead also ...no ...u not making sense to me mate ...current year fund charges discounting I understand but many future years charges discounted today while many future years growth not accounted is little too much to digest ...and its not very hot as yet ...so I can still think straight ....I guess :p

[Rawz]

Can’t be the fees as BRM, KFL and MLN all have different nav discounts. (I’m assuming FF charge the same fee for each listed entity).. me thinks it’s more to do with past performance and then interest rates