-
24-10-2020, 06:08 PM
#721
Originally Posted by tango
Fisher funds do a good job although I’m not so sure on ANZ! I used to own kingfish marlin and barramundi
What’s the advantage of warrants? Dead cost if you don’t exercise them. I must be missing something??? Can you please explain the logic behind warrants rather than purchasing shares directly
https://www.barramundi.co.nz/assets/...Terms-2020.pdf Warrant terms and conditions.
Note - The future exercise price will be adjusted for the dividends paid in the next year. Yesterday at the annual meeting the possibility of the exercise price in late October 2021 being 64 cents was discussed. Buying warrants now at say 11 cents plus 64 cents a year from now converts to shares and at a total cost of 75 cents this is considerably cheaper than buying the shares now at 82 cents.
There are other benefits such as leverage and risk management.
Outlaying just 11 cents now you benefit from all the upside potential in a share worth 82 cents over the next year, (leverage) but if the world goes to hell in a handbasket the most you can lose is 11 cents, (risk management).
I really like the diversification this brings to my portfolio. I also really like the risk management aspect warrants bring to my portfolio especially in these uncertain times.
Last edited by Beagle; 24-10-2020 at 06:14 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
-
24-10-2020, 06:11 PM
#722
Junior Member
Originally Posted by tango
What’s the advantage of warrants? Dead cost if you don’t exercise them. I must be missing something??? Can you please explain the logic behind warrants rather than purchasing shares directly
If you think the SP is going to do well over the life time of the warrant, then they effectively allow you to leverage what dosh you have - the downside as you point out, is that if they don't, you lose
-
24-10-2020, 06:43 PM
#723
Member
Originally Posted by Beagle
https://www.barramundi.co.nz/assets/...Terms-2020.pdf Warrant terms and conditions.
Note - The future exercise price will be adjusted for the dividends paid in the next year. Yesterday at the annual meeting the possibility of the exercise price in late October 2021 being 64 cents was discussed. Buying warrants now at say 11 cents plus 64 cents a year from now converts to shares and at a total cost of 75 cents this is considerably cheaper than buying the shares now at 82 cents.
There are other benefits such as leverage and risk management.
Outlaying just 11 cents now you benefit from all the upside potential in a share worth 82 cents over the next year, (leverage) but if the world goes to hell in a handbasket the most you can lose is 11 cents, (risk management).
I really like the diversification this brings to my portfolio. I also really like the risk management aspect warrants bring to my portfolio especially in these uncertain times.
These warrants will certainly do well if things continue to tick along nicely. A quick question though - what are the tax implications on any capital gains given that dividends are not received before the exercise day?
-
24-10-2020, 06:48 PM
#724
Originally Posted by Beagle
https://www.barramundi.co.nz/assets/...Terms-2020.pdf Warrant terms and conditions.
Note - The future exercise price will be adjusted for the dividends paid in the next year. Yesterday at the annual meeting the possibility of the exercise price in late October 2021 being 64 cents was discussed. Buying warrants now at say 11 cents plus 64 cents a year from now converts to shares and at a total cost of 75 cents this is considerably cheaper than buying the shares now at 82 cents.
There are other benefits such as leverage and risk management.
Outlaying just 11 cents now you benefit from all the upside potential in a share worth 82 cents over the next year, (leverage) but if the world goes to hell in a handbasket the most you can lose is 11 cents, (risk management).
I really like the diversification this brings to my portfolio. I also really like the risk management aspect warrants bring to my portfolio especially in these uncertain times.
Thank you for explaining!
The current market makes no sense so I have no idea what will happen. Logically a crash. But there’s no logic to the market... so warrants could be a good option. Putting it on my Watchlist...
-
24-10-2020, 07:04 PM
#725
Take a look at Kingfish warrants due 12/3/21 and Marlin warrants due in less than 2 weeks.
MLNWD can be bought for 23 cents and 86 cents to pay on 6/11/20. That is 109 cents for a share trading at 116 cents. Another div due by Christmas.
-
24-10-2020, 07:11 PM
#726
Originally Posted by sampson
These warrants will certainly do well if things continue to tick along nicely. A quick question though - what are the tax implications on any capital gains given that dividends are not received before the exercise day?
There are so many possible different scenario's that I can't give specific tax advice and am loathe to do so on this forum but that said for people who are buying the warrants with the specific intention of selling them for a gain before maturity, any gain would normally be taxable, (bought with the intention of resale). For shareholders buying warrants with the intention of exercising their warrants in due course to get Barramundi shares, provided those shares are held long term a strong argument could be made that any value accretion through the process of owning the warrants is tax free as the payment for the warrant ostensibly amounts to a down payment on the shares.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
-
24-10-2020, 07:22 PM
#727
Originally Posted by 777
Take a look at Kingfish warrants due 12/3/21 and Marlin warrants due in less than 2 weeks.
MLNWD can be bought for 23 cents and 86 cents to pay on 6/11/20. That is 109 cents for a share trading at 116 cents. Another div due by Christmas.
Yes as I pointed out at post #409 here https://www.sharetrader.co.nz/showth...&highlight=KFL just 9 days ago there was quite an opportunity with KFL warrants at 16.5 cps, closed Friday at 19 cents, a pretty tidy gain of 15% in 9 days for anyone that took advantage of that opportunity. I updated my valuation on those warrants yesterday and got 23.4 cps so there's still plenty of value on the table. I have a lot already otherwise I would have bought more at 16.5 cps.
The Marlin situation is less clear as the shares are trading ~ 4 cents higher than the NAV and the warrants are exercisable right around the time when the US markets could be in a state of potential turmoil with an uncertain election outcome . I think a bit of caution might be appropriate there but I agree 100% that the warrants of Marlin make more sense than the shares at present. One also needs to keep in mind that the exercise of warrants at 86 cents will dilute the NTA of Marlin. Based on my calculations the Marlin warrants are worth about 22 cps taking into account the dilutionary effect, slightly less than the closing price yesterday.
Last edited by Beagle; 24-10-2020 at 07:26 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
-
27-10-2020, 09:19 AM
#728
BRM and KFL could be on sale today!
I personally will be waiting for a market correction before investing in either
Last edited by tango; 27-10-2020 at 09:29 AM.
-
28-10-2020, 05:09 AM
#729
Junior Member
Hi Beagle thanks for making Options all a bit clearer. I have been invested with FF since they started up. It's taken a while for BRM options to be a good investment but happy to see FF fundamental process of investing come to fruition. My primary reason for investing in FF is the transparency. With regard to this process of adjusting the exercise price for Dividends, is this new? I have exercised Marlin in the past and am pretty sure this did not happen?
-
28-10-2020, 07:58 AM
#730
Seadog they have always done it the same way in all three companies.
Tags for this Thread
Posting Permissions
- You may not post new threads
- You may not post replies
- You may not post attachments
- You may not edit your posts
-
Forum Rules
|
|
Bookmarks