Mega Brands Inc MBLKF

More on the warrants

[wrighton]

Here's a quick and dirty comparison of potential performance between shares and warrants.  The numbers below include time value for the warrants, which for the last several days has been about .18, that being the market value of the warrants when their exercise price was equal to the share price.   Time value will drop to zero by the expiry date, but could increase from .18 if share price rises significantly, but the numbers below assume a constant .18 time value.   Warrant price and share price are as of closing today.   You can see that  share price doesn't have to rise by much before the warrants outperform the shares.   The numbers were better for warrants on Friday, but I dithered for 1 day too many, and had to settle for buying at .22 today.  Still compelling value, in my opinion.  Of course, the better possible returns are balanced by the risk that you could lose the entire value of the investment if the share price doesn't perform as we hope, and that the warrant value could lag the share value for more than shown until share price rises a bit more.

Check out canadianwarrants.com/values/current.htm  which gives details on virtually all Canadian tradeable warrants.  But don't take their numbers for granted - there are a few errors in the tables.

			Exercise price		0.50
Expiry 2015 03 30			Warrant price ==>		0.24
			Share price ====>		0.55
			Time value ====>		0.18
Share	Warrant	Warrant	Warrant	Share
Price	Value	Profit	% Profit	% Profit
0.50	0.18	-0.06	-25%	-9%
0.60	0.28	0.04	17%	9%
0.70	0.38	0.14	58%	27%
0.75	0.43	0.19	79%	36%
1.00	0.68	0.44	183%	82%
1.25	0.93	0.69	288%	127%
1.50	1.18	0.94	392%	173%
1.75	1.43	1.19	496%	218%
2.00	1.68	1.44	600%	264%
2.25	1.93	1.69	704%	309%
2.50	2.18	1.94	808%	355%
2.75	2.43	2.19	913%	400%