FormerXBC Inc XEBEQ

RE:RE:Warrants

[treehill]

Sorry, I'm not following some of your logic here. You say that if you exercise the warrants you'll get 1,000 shares and have $1850 in cash. Where does this cash come from?

My understanding is this: the warrants give you the right, upon payment of $1.85 per share, to a share of XBC. So even if the price of the share is $5.85, you only pay $1.85 plus a single warrant for each share. No one is handing you $1.85 - you have to provide that money when you convert the warrants. Alternatively you can sell the warrants and realize a great ROI, but you then don't get to participate in the future rise of the share price.

I started buying the warrants at 12 cents - I couldn't believe that anyone would sell them at that price. So my investment account is showing a huge ROI for those. My original strategy was to sell half at $3.70 and use the proceeds to convert the rest into shares. Since that time I have changed my mind and at some point this spring will come up with $1.85 / share to convert all the warrants into shares. As I fully expect to see these shares above $10 within the next 24 months (and much higher over the long run) it doesn't make sense to cash out.

Resilience19 wrote: @Qe, realizing I didn't quite fully answer your question, here is a bit more insight, bearing in mind I'm certainly not a subject expert, so others may want to interject. Let's say you but 1000 warrants today @2.15, these will cost you $2150. If the SP rises from $4 to $5.85 and that the warrant is valued at its intrinsic value (no premium), the warrant will be worth $4 (5.85 - exercisable warrant price of 1.85), meaning your warrants will be worth $4000. If you exercise them you'll get 1000 shares and have $1850 in cash ($4000-$2150.You can keep the cash or, if you feel xbc will continue progressing, buy more shares. For instance, if you used the $1850 profit to buy shares at $5.85 this would give you an additional 316 shares, for a total of 1316 shares. At $5.85/sh your 1316 shares would, therefore, be valued at $7698. Had you elected to buy shares, in lnstead of warrants, with your original $2150, you would have gotten 538 shares at $4.00. At $5.85 these would be worth $3147. A nice rise but somewhat less of an ROI compared to the leverage generated by the warrants. That's one of the reasons why @tamaracktop has expressed, in a few occasions, his bewilderment at the lack of a premium on the warrant price. As I said, I'm not a subject expert so others may want to chime in. For my part, it's simply nice to watch the progress in my account. Reason why I have no urge to trade. I keep and that's it. Only buy I did was in December after it pulled back from it's end-Nov peak of 0.80 and went down as low as 0.53 on 30 Dec. During that period I added at 0.75, 0.62, 0.55 (largest chunk) and 0.53. So, I'm pretty comfortable with the xbc warrant approach but wouldn't say the same of other warrants I've had in the past. So you, generally, need to be careful with warrants but, xbc I feel is a pretty safe bet.

QekaaQ wrote: If I buy warrants at current pricing and decide to exercise them would those shares be considered to be bought at 1.85$? If for example shares trade from 4$ to 5.85$ after exercise I would make 100% gain? Just wondering if perhaps that would a better option instead of buying more regular shares ...