Apollo Healthcare Corp Warrants (03/01/2022) APHWF

Warrant Value At Strike Price For AHC.wt

[RTO]

My software is showing the warrants (AHC.wt) at a fair market warrant value of $3.38/warrant if the shares were trading at strike today.  The percentage potential gain between the shares and warrants is significant in favour or the latter.

[Ventoux]

What annualized volatility are you using? 

[RTO]

Ventoux, 50% conservative volatility variance.

[Ventoux]

Based on the CURRENT price for AHC ($3.98) per share the fair value of a warrant TODAY, using a 50% volatility is $.05.

[RTO]

Wrong, Based on the CURRENT price for AHC ($3.98) per share the fair value of a warrant TODAY, using a 50% volatility is $.18 not $.05.

[Ventoux]

Really? What is your risk free rate? I am using 5%. 

[RTO]

Ventoux, my risk free rate is 0% just like the interst rate being offered at the banks.  I try to use the lowest possible interest rate & volatility variance possible to give an ultra conservative fair market warrant value. Everyone uses a different formula method and you need one that works well for you.  Ours are obviously very different in that when I enter your 5% risk rate, my

[Ventoux]

@RTO, My inputs are as follow:  Time to expiry: 1.25 years  Strike Price: $11.50 Stock Price: $4.00 Annual risk free interest rate: 5% Annualized volatility: 50% which suggests a fair value of $.05  lowering the risk free rate to 0%, gives takes the  fair value to $.04 I guess that is what makes markets. My risk profile will keep me in the stock relative to the warrants

[RTO]

Ventoux, cannot agree with you more about respecting ones individual risk profile!  I developed my warrant software program over two decades ago and have been tweaking it ever since to arrive at a result that I know what to expect and comfortable with.  Warrants are complicted and not suited for the majority of the investment public.  If everybody purchased the underlying warrants

[RTO]

Ventoux,  in hindsight, if you calculated a fair market value of $.05 when the shares were at $4.00, they would not have anticipated them as undervalued thus no buy signal.  My calculation showed them as undervalued by over 50%, so I continued to accumulate to take advantage of the latest percentage gains.

[Ventoux]

@RTO. Nicely done. Hopefully you get the volume to be able to sell them at a nice profit. I am happy with my stock position.I like the liquidity and the strike price and the time to expiration. I wonder if BMO will cross another 207,100 shares at today's close.  I wonder what that is that all about?  GL

[RTO]

Ventoux, volume will change dramatically when common trades over $5.00.  Many investment funds criteria requires that shares trade above that minimum threshold level in order to hold the shares in their portfolio.  After which its a whole new ballgame as the warrants will trade in sync with the common as a "derivative" to the shares.  The fair market value percentage

[Timetravel1]

This is going to be very interesting. GLTA

[Ventoux]

If my aunt had balls she would be my uncle.

[RTO]

Ventoux, my spreadsheet still showing a 50% discount to fair market value.  How about you?  We are showing signs of the volume you were looking for.

[Birdwatch]

I see the shares being at $16/share and the warrants at $4.50/warrant as soon as the big boys get involved after the share goes over $5. GLTA

[RTO]

Birdwatch, they are well positioned as a leader in white label manufacturing.  Now that debt is all paid, making growth like earnings, there are just so many options available with all that cash.  Dividends, an acquisition, open a second facility to produce CBD................ Holding my warrants tight until your $4.50 target! Remember, this time last year they were granted a Health

[deleuze68]

This is just so ridiculously cheap. It's trading as if it is mired in debt. Just look at WBE.V and how much it jumped today, now trading at 15x earnings. Apollo should at least command a valuation similar to other big consumer staple companies (think P&G), 20-25x earnings. Which begs the question, what are AHC's normalized (post-covid) earnings? Without any debt to service, with white

[Ventoux]

@RTO  I thought I did but I don't see the post so I will try again. My model suggests $.18 at $4.69, 1.1 years, with  60% volatility and a 5% risk free rate. At 0% RFR $.15. There are in excess of 20 million warratnts outsatnding according to TMX so my concern re: liquidity is not in buying warrants but rather in being able to sell them,  "You can always buy them, but

[Rc0gburn]

Ventoux -  I agree with your pricing. I used Bloomberg and got approx high 50's vol at 15-17c with delta about 10-12 at this current stock price. Gearing is 40x If we are all bullish on AHC stock, then the warrants are a leveraged way to play. At $11.50 the warrants can become stock and if they are all exercised we'll see 30% dilution as holders. Its 20million shares equivalent which

[RTO]

Rc0gburn, at $11.50 warrants become stock, but the company also in a position to get a cash injection of $230 million from warrant conversion!  So when the warrants trade in the money, that injection is baked in and the company can use that money for expansion or aquisition, which will increase the EPS.  That"s how to get them to $15 and even $20 afterwards.

[Rc0gburn]

Yes ! Very good point, all that money on exercise does come to the company.                                                      &

[Birdwatch]

@RTO Not everyone sees the potential, I see what you see and it looks amazing!!!!!!!!!!! GLTA

[Ventoux]

@RcOgburn I totally agree, but nevertheless at this time I prefer the stock for exposure to AHC at this time over the warrants as the warrants are $6.77 out of the money, and expire 433 days from today.   I modelled the stock at $9.54 one year from today, a double. I have no clue where the stock will be in a year but I have to start somewhere.  Here goes Share price: $9.54  5

[Birdwatch]

You would be right if the company just stood there and held their D!cks to play Edward scissorhands. The reality is that this company made a come back from a disaster that no one thought was possible. I highly doubt that they will just sit around and hope for the best. The CEO's of the company hold over 20 million in shares at $10/share they will not let go until they reach exponential share

[Ventoux]

@Birdwatch, Yes, I agree no one was expecting the company to do what it did. That is why the stock went from $.60 in August to $4.50 plus some three months later. Was it all through sheer genius or do think there might have been a tiny bit of luck as well? After all the company does manufacture hand sanitizer. I for one am waiting with bated breath for all these announcements you are

[Birdwatch]

Don't hold your breath non disclosure claws, no announcements you will only see the results in the financials. 

[RTO]

@Ventoux I read over your warrant fair market value modeling assumptions a couple of times to see where it is flawed.  The calculations you are using in your spreadsheet will always show a warrant as "overvalued", thus it will never give you a property buy signal to safely enter that warrant.  A lagging indicator if you will.  A great example are the AHC warrants.  

[Ventoux]

@RTO  Without a doubt a $.78 warrant price versus yesterday's closing price is a great percentage gain, even a dinosaur like me can see that! However, for the warrant to trade at $.78 to  you will agree the stock needs to go significantly higher. I invest to make money. Assume an investor owns 25,000 shares of AHC (average cost of $4.00) and wants to make $100,000.00 to compensate

[RTO]

@ VENTOUX How about searching your couch for some loose change and help take AHC up to close at the $5.00 threshold today? Would make for a nice start to the weekend!

[Ventoux]

@RTO No worries as I bought more  at the open. My wife and I are walking the neighbourhood this wekend searching for empty wine bottles and beer cans so we can purchase more shares next week!  Enjoy your weekend. 

[Birdwatch]

LOL!!! GLTA

[Happy007]

  That is right on! Looking forward to some serious $$$$$$$$$$$$

[Timetravel1]

Bump