Jonnyboy85 wrote: Well here it is anyway Vicky. Judging by Liths reaction you were being insincere in your reply but maybe something gets lost in translation. Either way it's good information so here it is. On a side note I was also wondering if the WS warrants could be offered as half warrants in the prospectus but be issued as whole by the company? That could explain why you see that on canadianwarrants.com. I wasn't able to find it myself, only the WT. I don't usually use that platform so I'm not sure how to find what you saw showing 1 to 1. Anyway here is my response to vicky
I think what the board has been driving at is that the new WS warrants are so far priced higher than we expected (0.16x2 +1.10 to exercise =
$1.42, OR 0.16x1 + 1.10=
$1.26 depending on what custodial says monday, thank you str8shuter:) and near at par or higher than our existing WT (0.07x8 + 0.72 to exercise =
$1.28), which also could explain why we had 2.6 million in volume bought up on the WT warrants friday. This is what I've talked about before, it's called an arbitrage opportuinity. Essentially the pricing discrepancy should not exist, and if anything it should be reversed, because the new WS warrants are exercised at $1.10 per share (more expensive=not as good) and the former WT is exercised at 0.72 per share (cheaper=better), you should see the market place a higher value on the WT warrant because, with the open market shares at 0.70, the WT is closest to it's exercise price with and thus closer to profit and thereby more valuable. An easier way to explain it is that in order to make money on the WS warrant, the shares on the open market have to be trading above $1.10 in order for it to have intrinsic value, but the open market shares only have to be trading above 0.72 for the same with the WT, which again would still result in the WT being even more valuable anyway because it would have even more intrinsic value, and so that spacing should always be evident because it should always be closer to profit than the WS. This of course doesn't account for time value lost on the WT warrant though. With the WS warrant being newer that could account for a bit of attention drawn to it, but that definitely wasn't the case friday. I'm not really sure that a 5 month difference would really change the time value that much at this point anyway, maybe later on when we get closer to 2 or 1.5 years in. Also this doesn't take into account people just buying the warrants to trade them and have no interest in exercising them one day.
If you don't trade warrants, like you were saying, the reason this could be important information is that the pricing discrepancy could lead people to believe that its not just the WT warrants that are undervalued but also the shares, because naturally they are related and should follow a similar path pricing wise. Kind of like looking at index futures for a hint at what people expect to happen the markets during specific upcoming time periods. Also because the WS warrants are being sold to professional investors like institutional groups and accredited investors, it's likely that they have done far more research and know far more than any of us do. You have to remember that those pro investors are the ones selling the warrants right now, so if they think the new WS warrants with the higher strike price of $1.10 should be valued higher than the market has been treating the WT warrants, which by all logic are more valuable because the strike is 0.72, then you can fairly safely say the market should adjust accordingly and the shares and WT warrants should climb to meet that or even surpass it in the case of the WT warrants. Likewise the WS warrants should lower and settle beneath the WT value as the arbitrage trading eliminates that valuation difference.
That narrowing of pricing discrepancies is called convergence and the two values should come into harmony with each other, and the share price, as arbitrage traders take advantage of the pricing difference. NOW with all that said, the WS warrants can be sold for any amount and it doesn't mean that it's correct, under priced, or over priced, so it could have no bearing on the shares and WT warrants in the end but depend more on the actual sellers, buyers, and what they are after. It could just be a bluff by the current holders of WS warrants to make a quick buck and could be based on nothing more than greed. But if you're a believer in the efficient market theory, like I am, we should see these two prices fall into their correct order, with the WT warrants being valued higher because of the lower strike price of 0.72. The market will see to it that all values fall into harmony with, and on the same underlying security, just depends on how long it takes to happen. Links below, also added the kpmg warrant revaluation at the bottom for you brad, it's dry but it explains everything
https://www.investopedia.com/terms/c/convergence.asp https://www.investopedia.com/terms/a/arbitrage.asp https://www.investopedia.com/terms/w/warrant.asp https://assets.kpmg/content/dam/kpmg/in/pdf/2018/06/AAU-June2018-Chapter3.pdf vicky55 wrote: Pour ceux qui ont un portefeuille actions ordinaire,est ce que cette nouvelle est bonne ....