KFL - discount to diluted NAV

[alokdhir]

If u hold warrants till July24 end and then either sell in market or exercise them ...Holders now will not loose on any dilution of NAV on his original holding

Eg ...In July 2024 NAV is $ 1.60 and exercise price is $ 1.25 then if all warrants get exercised then after dilution NAV looses 7 cents ...which shud be covered by selling warrants for 28 cents and over that will be profit reducing your original purchase price ....which is easily possible if SP is 1.60 then warrants can be 35 Cents

Other option is to sell head shares @ 1.60 and exercise your own warrants @ 1.25 ...which is equivalent of selling warrants @ 35 Cents ...this involves some paperwork so provides maximum value for original allotted free warrants

PS : Or one can bring fresh funds to buy new KLF @ 1.25 using his OWN free allotted warrants

[Rawz]

Yes but if you dont hold either and looking to buy (i.e. you are the demand for the SP) then you need to track the diluted NAV end of story

[bull....]

Yes but if you dont hold either and looking to buy (i.e. you are the demand for the SP) then you need to track the diluted NAV end of story

yep there portfolio return weighted has barely moved last couple yrs but nav being dragged down by div's paid out. going forward they need the portfolio to perform overall

[alokdhir]

This is not the first warrant issue from Fisher Funds ...it has never effected regular demand before .So safe to assume it will keep trading normally as per previous experiences of similar nature ...though they do highlight in every weekly NAV announcement about warrants pending etc

PS : Since 2004 launch ...I think KFL had 8 warrant issues and KFL still did well for the even original holders of $1 face value who did not bring any further funds to subscribe to these warrants ...it paid 8% of NAV PA and still has $1.37 capital ...overall it was and maybe is a good investment

[ronaldson]

I note that the market doesn't seem to share my view that the current share price for KFL under values the worth of the warrants just announced. It looks like about 2cps is priced in presently, which on a 1 for 4 basis equates to SPC's view that an individual warrant will trade at 8 cents when they are actually listed early next month.

[alokdhir]

Record date is 5th July ....expect to see warrant related activity near that time ....1.35 is still a possibility !!

Also what market values warrants now is less material then what it can be worth in 13 months ahead ...if one has a view that market will be materially higher from current levels then it provides opportunity to accumulate them as cheap as possible

These warrants are like Call options ...so they have a price value which is fixed around $ 1.25 and then time value which decays over time ...putting both together I still reckon they will trade in 10-15 cents band at start ...7th July is not far

If markets are moved by rates primarily then easy to relate them to 13 months interest rate expectations of the market currently ....which is pretty down from current levels thus my view stocks will be much higher then now

[mike2020]

Fair call but a lot of people seem to be thinking interest rates have yet to peak. No crystal ball here but having seen a few of these run through I expect a fair amount of activity initially followed by a good 9 months of wait and see. Which to me means a few people who had them last time will take what's on offer in the first month.

[ronaldson]

Annual report published today. Not a good year. Unsurprising the last warrant issue expired worthless.

10m more shares on issue at 31 March than at 31 March 2022 and around $40m+ less value in the underlying equity holdings.

Hopefully a turnaround is coming!

[Rawz]

Annual report published today. Not a good year. Unsurprising the last warrant issue expired worthless.

10m more shares on issue at 31 March than at 31 March 2022 and around $40m+ less value in the underlying equity holdings.

Hopefully a turnaround is coming!

Havnt read it but based on your quick summary i assume the manager didnt take a fee and possibly even gave some money back? (joke)

[alokdhir]

Last two days of trading left for CUM warrants KFL ...Tuesday it shud trade ex warrant !!