warants verses equities

[salsanova1]

[8D]hi ,
i just brought some IFTWB warrants today @95c ,redemable on the 07/2009 @$3.50
Can someone be kind enough to explain in plain english how these work.
It is to my understanding you can pay the balance @ 07/2009 or is it the $3.50 on the date.
Also can you redeem the shares before this date
I am also interested in constructive comment and debate on the issue of warrants verses direct investment in share equities
salsa:)

[Snow Leopard]

It is probably better if you understand what you are buying before you do the buying, but in this case no harm done.

You have purchased the right to buy a pukka IFT ordinary share for $3.50 on or before the close date. i.e you need to come up with $3.50 not $2.55.

Warrants give you leverage in that they their trading price is basically directly related to the share price. It goes up 5C the warrant should go up by a similar amount and vice versa, so they are a good scheme to make or lose your money quicker.

The difference between warrant and price and share price is currently $3.00 and not the $3.50, the theory being that this $0.50 represents the fact that you have the $3.50 to play with for the next four years.

An online search will expand your knowledge in this area.

regards

[salsanova1]

[8D]Thanks PT ,was'nt overly sure on the warrants but are now.
brought the iftwb on the longer term view
like to buy bundles in no less than 6000 shares at a time
this makes trade cost cover @1c
warrants allow me this luxury to have shares in quality company at a fraction of the cost
This free's up funds to spend on high risk spec stocks(dangerous occupation for the beginer)but feel the fear and do it anyway
HOLDING 60%
HQP
ING
IFTWB
SPEC TRADING 30%
SLG

[CJ]

What is the deal with tax on Warrents. You cant say you bought on capital account (not taxable) since they dont pay dividends. So that means you must have bought with intention of capital gain (income and therefore taxable) so any gains on the warrents are taxable.

Any views on this as I know a few of you hold them. the only ones I have were given to me by IFT (I think) so I had no intentino at time of acquisition - yay.

[Snow Leopard]

Interesting question CJ. The important thing here is intent, even though the IRD are likely to determine intent from the time you hold generally hold stock market instrument.
So if you bought the warrants with the intention of holding them and converting to [potential] incoming producing shares down the track then I can see no problem. Especially if that is what you actually do.

[Lawso]

On the other hand,PT, warrants are sometimes issued free to shareholders, as has recently been the case with SPE/CHA and before that with DPC. I chose to sell my DPC warrants - money for nothing - but would simply tell the IRD, if asked, that I preferred to put the cash into dividend-paying ords, on which of course tax is paid.

[CJ]

Lawso,

If you are given the warrents, you had no intention to capital gain so not taxable. My issue is if you buy the warrents - you know you wont get any income from them but as PT states, you are buying them for future income once you convert to head share.

I have been considering buying a few warrents but have been concerned with the tax issue - I always buy for long term hold and would intend to convert once they mature.

However, that doesn't mean I will never sell so what happens if I decide to sell before I convert.

[Snow Leopard]

The whole business of whether your capital gains are taxable is a grey area with no definitive rules. We have had long threads discussing this in the past. But generally if you average out holding on to shares for four or more years then the IRD would probably not be interested in your capital gains.
However if they are then they will want to treat you as a trader and tax all your capital gains.
Buying warrants with the intention of converting them to shares later for the [potential] income I hope/believe is fine. If you then later sell them before converting them [provided you did not sell them to realise the capital gain] there is likely to be no problem.

Paper Tiger the investor (who holds long term and does not pay capital gains tax) bought and converted some NOG options in the belief that NOG will start paying a dividend when their current projects are up and running in a few years time.

Paper Tiger's share trading company limited (a separate taxable entity) bought and sold NOG options, made a lot of money and pays the tax on the profits.

[Not too Flash]

Looking at Kingfish Warrants currently at 8c with payment of approx $1.19 in November 2015 v Share price at $1.35. What's the catch ?

[Dej]

Looking at Kingfish Warrants currently at 8c with payment of approx $1.19 in November 2015 v Share price at $1.35. What's the catch ?

The warrant exercise price is, as per the fact sheet;
WARRANT EXERCISE PRICE$1.29 as of JUNE 2015**

Therefore, adding on the 8c cost to the $1.29 exercise price = $1.37
Current shareprice is = $1.35, like you said, so therefore it is not a deal.

In fact, at current levels, you will be losing money.

**They also state that the exercise price will be adjusted due to dividends being released, so unless it has come down to the figure you said, as far as I see it, its pretty much on parity.

[Harvey Specter]

Plus you cant currently buy at 8c. Cheapest on offer were 9.5c.

[Not too Flash]

The payment due is $1.29 less dividends paid in last year - just over 10c so $1.19 due. Therefore at under 10 cents looks like I bargain to me. Would appreciate any further details. Cheers