RE:Why are the warrants trading for below intrinsic value? quote=Junior1969]Why are the warrants trading for below intrinsic value? I'm referring to the "first series" with exercise price of $1.75 good for 3 years. They seem to be trading around $2.10, yet stock price is higher. Am I missing something? Thanks.[/quote]
quote=MikeyStew]That's why I bought them instead of the shares. At the time They seem to "currently" be of good value. $1.75 + $2.10 is $3.85 or buy the shares today at $4.34. If I exercised them immediately I'd walk with a quick 12.7%.[/quote]
Not so fast! You're not walking away with any profit as when you convert your 1.75 warrants into shares, there is a 12 month hold before you can sell the shares. So essentially you have no idea if you will walk away with a profit or a loss as nobody knows where the SP will be in 12 months after you convert. Hence the warrants lagging the SP.
Really the way Emblem structured the IPO and this latest $10M round, is absolutely brilliant. The covenants are such that they are staggered and prevent downward manipulation by the shorts to a large degree. In fact, I would go as far as say that the latest round which was oversubscribed was mostly snapped up by those shorts to cover their positions as they are having an impossible ability to do it in the open market without driving the SP.