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Originally Posted by justakiwi
I'm not sure if you're being sarcastic or not - don't know you well enough to judge that yet, but 500 warrants at $0.065 = $32.50 plus $30 brokerage = $62.50. If I decide not to exercise them down the track, that's what I've lost (wouldn't be worth selling them). If I do decide to exercise them at (who knows) say $1.22 and the share price is around what it is now, then I can add an extra 500 shares to my Kingfish holding, for around $600. Which means a few more "bonus" shares at dividend time.
I'm a beginner. I am trying to get my head around my options and weigh up the pros and cons of any action (or inaction) I take. This just seemed like a way to add to my holding without paying market prices.
Of course, I could be blonder than I thought and all of this could be a really bad idea.
If others thought it was a good idea they would have already done it
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Originally Posted by kiora
If others thought it was a good idea they would have already done it
How do you know they haven't?
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Originally Posted by 777
How do you know they haven't?
therein lies the risk...
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Originally Posted by huxley
therein lies the risk...
I'm sorry but I'm not getting it. How is this any more risky than me deciding to go buy another 500 shares on Monday at the current market price? I would have thought it was actually less risky. Worst case scenario I waste $62.50 (if I bought 500 warrants and didn't exercise them). Best case scenario I end up with an extra 500 shares at a significantly cheaper price than whatever the market price is on exercise day. If I was talking thousands of warrants then yes, it would be pretty risky, but I honestly don't see a huge risk in what I'm thinking of doing.
What am I missing
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The market for this should be reasonably efficient, so the pricing should be such that buying warrants doesn't increase your likelihood of profit (otherwise others would have spotted the opportunity and driven the price up). Unless you think you know better than the rest of the market (I certainly don't), you're relying purely on luck for this to work out in your favour. You're most likely just adding unnecessary complication. The other phrase to remember is 'there's no such thing as a free lunch'.
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Originally Posted by mfd
The market for this should be reasonably efficient, so the pricing should be such that buying warrants doesn't increase your likelihood of profit (otherwise others would have spotted the opportunity and driven the price up). Unless you think you know better than the rest of the market (I certainly don't), you're relying purely on luck for this to work out in your favour. You're most likely just adding unnecessary complication. The other phrase to remember is 'there's no such thing as a free lunch'.
But their can be hidden gems
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Member
Originally Posted by justakiwi
I'm sorry but I'm not getting it. How is this any more risky than me deciding to go buy another 500 shares on Monday at the current market price? I would have thought it was actually less risky. Worst case scenario I waste $62.50 (if I bought 500 warrants and didn't exercise them). Best case scenario I end up with an extra 500 shares at a significantly cheaper price than whatever the market price is on exercise day. If I was talking thousands of warrants then yes, it would be pretty risky, but I honestly don't see a huge risk in what I'm thinking of doing.
What am I missing
I dont think you are missing anything - you seem to have analysed the situation reasonably well. On past history the warrants having been converted to shares get rewarded with a good divi though share price doesnt move too much.
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Member
Looking at Kingfish warrants - exercise date is only 3 months away - estimated at $1.22 - current share price $1.36 - 14c difference
Thinking of buying a few thousand @ 6 cents - to hopefully double money
Any fish- hooks ??
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If that was a real $1000 note someone would already picked it up
Originally Posted by Not too Flash
Looking at Kingfish warrants - exercise date is only 3 months away - estimated at $1.22 - current share price $1.36 - 14c difference
Thinking of buying a few thousand @ 6 cents - to hopefully double money
Any fish- hooks ??
This looks too good to be true but the only issue I can see (apart from a possible decline in the NZX and thus KFL) is that in order to realise your gain you may have to front up $1.22 a warrant come May and actually convert to head shares, which you can then sell.
So you will need ready cash at the time.
Best Wishes
Paper Tiger
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Ignore my previous post & do not act on it
Dilution - we are probably forgetting about the dilution caused by the warrant to share conversion. Must do some real sums before posting further.
Best Wishes
Paper Tiger
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