Warrants, Broker Options and ShortsConspi's posts on warrants and shorts are very likely part of the same transaction. I assume anyone holding the 40 cent warrants or 29 cent compensation options or 33 cent finder options will exercise them as follows:
- Sell the TST shares short at a price above the exercise price.
- Once the short sale fills, wait 3 trading days until it settles to collect the proceeds.
- From the cash proceeds received, send 40 cents per warrant (or 29 cents per compensation option) to TST and ask them to issue a new share from treasury.
- Keep the difference in cash as profit.
- Use the newly-issued share, when received from TST, to close the short sale (instead of buying a share on the open market to close the short).
- Result: No investment dollars are put at risk. This would normally be called a "naked short", which is illegal, but it is not naked because the seller has a legal claim on the long shares because of the warrants.
- We saw the same soaring of short positions during each brokered share issue. The issuing broker closes out the short using the "over-allotment option", also called greenshoe option (explained in wikipedia). That is used to do the "market stabilization" which is disclosed ahead of time in the prospectus.
Conspi's list of Warrants and Options expiring in Sept is correct, but it only includes those from the share issue which closed on Sept 26, 2013. There are also broker/compensation options from the share issue which closed on Sept 23, 2014. These 2014 broker options are only 12 month options, unlike the 24 month options issued in 2013. So the complete list of warrants and options expiring by the end of Sept, 2015 are as follows:
- Sept 20th: 16,904,310 warrants exerciseable at 40 cents (re: 2013 issue)
- Sept 23rd: 1,754,900 comp options exerciseable at 29 cents (re: 2014 issue)
- Sept 26th: 2,172,413 comp options exerciseable at 29 cents (re: 2013 issue)
- Sept 26th: 194,189 finder options exerciseable at 33 cents (re: 2013 issue)
- Grand Total Sept 2015 expiries: 21,025,813
The Mar 31, 2105 financials (3Q) report that 872,500 warrants had been exercised in the first 9 months of the 2015 fiscal year. Although it says "warrant exercised", I suspect they really meant 29 cent compensation options. I suspect a lot of the "anonymous" selling this year in the 30-38 cent range was the brokers exercising their 29 cent compensation options.
Note: Palladin has a total of 3.0 million warrants, all of which expire on April 15, 2016 at various prices ranging from 23 cents to $1.00.
Note: The above list excludes employee stock options which might expire in Sept 2015. This is too hard to figure out until the 2015 annual report is issued (maybe this coming week?)
So starting in October 2015, the selling pressure is off the stock. Maybe earlier if everyone exercises safely before the expiry dates. Be patient. The stock price WILL go up. 44 cents is insanely cheap.