We start with the premise that warrants are a secret as so few investors know about the potential benefits via the additional leverage that warrants can offer. Did you know that virtually every company has some outstanding warrants in their capital structure? Simply, a warrant is a security giving the holder the right, but not the obligation, to purchase the underlying security at a specific price and expiring on a specific day in the future. Private Placement Warrants The warrants of most companies were issued in connection with a private placement and thus will never trade.

Yes, a few investors will have the financial ability and legal opportunity to participate in a private placement in the resource sector but those offerings by U. Savvy investors like Rick Rule and Warren Buffett would never participate in a private placement without receiving warrants with at least two 2 years before expiration and many times substantially longer.

Trading Stock Warrants Few investors are aware of the fact that today there are stock warrants which are trading on the Toronto Exchange, Venture Exchange as well as on the NYSE and Nasdaq. These trading stock warrants are bought and sold just like buying or selling common shares and is done through your regular brokerage firm.

This is perhaps the most important factor because if the company does not perform and execute on its business plan the common shares will not rise.

Of equal importance is the current market environment, that is, a bull market or a bear market. In the resource sector the shares have been beaten down badly and offer great upside opportunity, in our opinion. Does the company have a long term warrant trading? The longer the remaining life of a warrant the better giving the company more time to execute on their business plan and more time in the event of a market downturn.

Your minimum time horizon should be no less than two years of remaining life when you purchase the warrants.

Many of the warrants have over 3 years remaining and one of the most recently issued warrants does not expire until The warrant should be priced to deliver an upside leverage of close to 2-to Perhaps the best way to explain stock warrants and their potential is via a couple of real examples, one in the auto sector Generals Motors GM and one in the resource sector, New Gold NGD. Our examples are not intended to be recommendations to buy either the common shares or any of the warrants trading but only to show the math and the bottom line leverage potential.

Also, we are not providing any fundamental analysis of either company. Generals Motors currently has two warrants trading on the NYSE and will soon have another warrant trading.

Kitco Commentary

We will focus our attention on the warrant B, which currently has the best leverage opportunities of the two trading. Our interpretation is the price of GM warrants B is fair to under valued and represents good upside leverage. New Gold is a Canadian gold company that trades on the NYSE and on the Toronto Exchange.

When the resource sector returns NGD will be a good selection. Our interpretation here is somewhat biased as we own the New Gold Wt A and look forward to a recovery in the resource sector starting soon.

We are cautiously optimistic that these warrants will be a good performer well before the expiration date. Risk is always a factor in investing and one should remember that while warrants can offer exceptional upside leverage over the common shares, the warrants can expire worthless. If the common shares are selling below the exercise price on the date of expiration, the warrants are worthless.

Error (Forbidden)

It always makes sense to minimize your losses with any investment and stock warrants are no different. Common Stock Warrants Exclusive Database. Skip to primary content. Skip to secondary content. Home About Us Contact News Stock Warrant Handbook. Junior Mining News If you are interested in the.

sotoyege.web.fc2.com

Posted on August 8, by Jeff Baker. Posted in The Warrant Report Tagged commonstockwarrants , General Motors , GM , investment , Mining , New Gold , NGD , Penny Stock Warrants , resource warrants , Stock Warrant , warrant report , warrants permalink.

How to Trade Warrants Hedging Strategies Basic Definition of a Warrant How to Use The Warrant Database The Secret Of Investing With Stock Warrants Pierre Lassonde: Mining Cycles Are Good for Royalty Companies and Investors Warrant FAQ Why Consider Warrants?

Mining and Environment — Facts vs. Fear How Many Stock Warrants Are Trading? Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants.

Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.