Skip to main content

Culling The Covereds (Part 1)
Call Warrants Review

Air Asia-CA 10/2007
Warrant Px 0.225
Mother share 1.46
Conversion Px 1.96
Premium 49%
Gearing 6.5x
Verdict: Premium very high, not the best (B-)

BToto-CA 3/2007
Warrant Px 0.54
Mother share 4.66
Conversion Px 4.43
Premium 6.6%
Gearing 8.6x
Verdict: Great gearing and low premium. Even though time to maturity is near, but like I say, a market's best chance for a bull run is in the 1st and 4th quarters, so not much point holding onto a warrant expiring in the 2nd and 3rd quarters (A)

Bursa-CA 4/2007
Warrant Px 1.51
Mother share 7.80
Conversion Px 6.07
Premium -2.8%
Gearing 5.1x
Verdict: Discount, ok maturity into 1st quarter, ok gearing, but nobody believes me when I say Bursa shares can go to RM9.00, even though I always blast the Bursa (A+) please ignore this opinion as it was based on one for one conversion (which was wrong)

Well, ty Tangee888, see what i mean, the bloody Bursa covered is 2 to convert into one share, hence my calculations were wrong!!! So, I'm just gonna leave the original posting to reinforce my point. The proper calculation and verdict would be:
Premium: (2 x 1.51) + 6.07 / 7.80 = 16.5%
Gearing: 7.80 / 3.02 = 2.58x
Verdict: OMG, this warrant is quite expensive and the gearing is quite low too. I think its some kind of karma that the Bursa-Covered is the one to give me the problems - all the more ironic!! (C)

Commerz-CA 11/2007
Warrant Price 3.18
Mother share 7.85
Conversion Px 4.59
Premium -1%
Gearing 2.4x
Verdict: Good time to maturity left but gearing is pathetic, totally loses out on what makes a warrant. Even though no premium, not a good play (C)


Tangee88 said…
Your calculation of a discount for Bursa-Ca is inaccurate. There is actually a very big premium because you probably missed the fact the conversion/exercise ratio requires 2 (and NOT 1) CW. i.e 1.51 x 2 + 6.07 = 9.09 versus Bursa's current price of 7.70 !! Your angst against the lack of info and TRANSPARENCY is spot-on.

Enjoyed your column. keep up the excellent work.
Salvatore_Dali said…

see what i mean

Popular posts from this blog

My Master, A National Treasure

REPOST:  Its been more than two years since I posted on my sifu. This is probably the most significant posting I had done thus far that does not involve business or politics. My circle of close friends and business colleagues have benefited significantly from his treatment.

My Master, Dr. Law Chin Han (from my iPhone)

Where shall I start? OK, just based on real life experiences of those who are close to me. The entire Tong family (Bukit Kiara Properties) absolutely swear that he is the master of masters when it comes to acupuncture (and dentistry as well). To me, you can probably find many great dentists, but to find a real Master in acupuncture, thats a whole different ballgame.

I am not big aficionado of Chinese medicine or acupuncture initially. I guess you have to go through the whole shebang to appreciate the real life changing effects from a master.

My business partner and very close friend went to him after 15 years of persistent gout problem, he will get his heavy attacks at least…

Long Weekends

Passengers - Go Watch It

Passengers. Brilliant story telling. Visionary yet believable. Like Martian, only better. Space travel, science, romantic, desolation, philosophical, mortality n its devastation, spectacular imagery. Being human n humane. 9.7/10