Barramundi ( BRM )

[Beagle]

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.

[teabag]

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

[sampson]

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?

[tango]

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...

[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.

[Beagle]

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.

[Beagle]

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.

[tango]

BRM and KFL could be on sale today!
I personally will be waiting for a market correction before investing in either

[seadog]

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?

[777]

Seadog they have always done it the same way in all three companies.

[SPC]

No it's was changed a year or two back. Previously the exercise price was fixed. More recently they now deduct dividends paid to calculate the exercise price. I've owned all three funds since each listed...very large holding has accumulated over time.

[777]

No it's was changed a year or two back. Previously the exercise price was fixed. More recently they now deduct dividends paid to calculate the exercise price. I've owned all three funds since each listed...very large holding has accumulated over time.

On looking back at the early issues you are correct. The WA and WB were issued at a price that reflected the dividend payments to come. The WC, and after, quoted the adjustment in price for dividends paid during the period. There was one lot that were not in the money at exercise day if I remember correctly.

[SPC]

Yes on a one or two occasions the fixed warrant price exceeded the market price on the exercise date and so most warrants weren't exercised..ie no additional funds were pulled in. They've sharpened the offering now and so far so good...new shares at at a discount.

[Beagle]

There was a really positive atmosphere at last weeks annual meeting quite probably partly because they have outperformed the ASX by an incredible 19% in the last year.
I had a good chat with Robbie after the meeting and was very impressed by him. I think he and his team have done a stellar job since coming on board a few years ago.
With that sort of performance there is no need for me to work myself to the bone researching and analyzing Australian companies and I am happy to leave all my offshore investing to the team at Barramundi and Marlin.
https://www.youtube.com/embed/QfE6Ti0-_ck?rel=0

[SPC]

With BRM KFL MLN holdings you have a portfolio of approx 100 stocks across the globe in a whole range of sectors. Diversified to the max and all paid for in NZ dollars. Buy or sell anytime on nxz.
Tax efficient. Professional manager. Quarterly divs. Been in from the start. Rocky start on two but they're 9n the way now Add a local property fund and set and forget.

[seadog]

No it's was changed a year or two back. Previously the exercise price was fixed. More recently they now deduct dividends paid to calculate the exercise price. I've owned all three funds since each listed...very large holding has accumulated over time.

Thanks SPC so anyone know the reason for the change? Makes a bit of a sense as I guess the Warrants immediately become more attractive.

[SPC]

Hi Seadog yes the change more or lease endured the actual exercise price on the date was most likely to be less than the trading price at that date, otherwise holders wouldn't be inclined to exercise them. No advantage. I've held warrants that weren't worth exercising as the set price exceeded the market price..ie worthless. In the end what the manager wants us more investment cash for growth. Warrants are method used here.

[seadog]

Hi Seadog yes the change more or lease endured the actual exercise price on the date was most likely to be less than the trading price at that date, otherwise holders wouldn't be inclined to exercise them. No advantage. I've held warrants that weren't worth exercising as the set price exceeded the market price..ie worthless. In the end what the manager wants us more investment cash for growth. Warrants are method used here.

Cheers SPC

[teabag]

Any reason why the current SP (0.85) is trading so much over NTA (0.7575)? A 12% premium seems too much, even for an excellent manager. I've been waiting to accumulate more, but just can't bring myself to do so at those prices.

[Beagle]

Hmmm...does seem a bit much but the whole group are now trading at a premium to NTA of varying degrees. People at the annual meeting were astonished and pleased to note BRM has beaten the index by a whopping 19% in the last year. I asked the CIO whether he had ever done this before and he said no so its probably best to take a 3 year view.

The question one must ask oneself is this. How much of a premium, (if anything) am I prepared to pay to NTA to have my money invested with this team, Marlin or Kingfish given on an NTA to NTA basis, (so after fees, managers expenses and performance fees), they have beaten their respective benchmark indices on average per annum over the last 3 years by :- (source Sept 2020 quarterly reports)
BRM 8.9% http://nzx-prod-s7fsd7f98s.s3-websit...876/333422.pdf
MLN 9.7% http://nzx-prod-s7fsd7f98s.s3-websit...879/333424.pdf
KFL 2.5% http://nzx-prod-s7fsd7f98s.s3-websit...873/333416.pdf

I can't answer that question, each person has to decode this situation and decide for themselves but I have a few thoughts to share.
With the mangers performance I think the days of people expecting to buy any of these funds at a discount...well, they'll be lucky, I'll put it that way.
Could it be with so many companies deferring or cancelling dividends this year with Covid and with interest rates at 100 year lows, that retired folks are flocking to the 8% tax free PIE dividends of this group as a way to increase their income. Classic set and forget and get 2% tax free dividend every quarter is extremely attractive !
Maybe people need to be considering the warrants as the only way into these excellent funds without paying a premium ?

Believe me I would LOVE to buy some BRM and MLN at a discount to NTA or even at NTA.