Mega Brands Inc MBLKF

warrants

[Godfather1]

Anyone know why the warrants haven't moved? Stock price has been on a tear but warrants are silent.

[wrighton]

Owning the warrants has been really frustrating.  The only reason I can think of for their depressing performance is that the market didn't think Mega would have a good quarter, and perhaps share price wouldn't appreciate significantly during the final two years of the warrants.    Analyst estimates were along the lines of .17 per share, I think, with one recent analyst

[FFHwatcher1]

Leverage   100,000 warrants ($16,500 @ $0.165) @ 1:20 = 5,000 shares ($62,500 @ $12.50) $64,500 / $16,500 = 3.8 times leverage with 2 years to go $0.165 x 20 = $3.30 above the strike price Strike = $9.95 + $3.30 = $13.25 Current Price = $12.50 Premium = $0.75 Warrant buyers are paying about 1/4 up front for  2 years for a 6% premium.  Premium was a lot larger and it has come down as

[wrighton]

FFHwatcher1: I have done the analysis in a somewhat different way, but the final results are the same:  at $15 and no time value left, profit is just over 50% for the warrants, 20% for the shares.  I like the warrants, and own a truckload. Of course, leverage works both ways!  If MB has a mediocre couple of years, and share price goes back down to $10 or less, I have lost 100%. 

[llennn]

You forgot the different between the warrants and a share owner is you own a slice of the pie, where as a warrant gives you a right to a slice,only if you are willing to pay or the company wished, the later case would give me a 40% larger slice for my pie, there are two large sharks here and they like to eat little fish,so there is security in owning a share of the company 

[FFHwatcher1]

You are overstating the value of owning a share vs. warrants, in my opinion.  Both are contractual obligations. Bertrands, Trimark and Fairfax control MB, mostly Fairfax, so your vote isn't worth much more than a good feeling. The company can't stop me from exercsing my warrants to purchase shares so I do not really understand why you state that I can only become a shareholder if the

[llennn]

The Company has the first option,to purchase the warrants at anytime, yes they can be converted at this time by a holder but it would make more cents to sell warrants and purchase the shares, so no one is going to convert at this time, what I mean to say is this company tends to hold alot in reserve, and I am not saying it will but it would not surprise me if one day they repurchase these warrants

[llennn]

Remember this company has two of the top 1% of the top 1%>

[FFHwatcher1]

We agree on one thing.  Someday, MB may one day re-purchase some of their warrants. 243,844,000 warrants 20 warrants to buy 1 share Strike Price of $9.94 12,192,200 shares to be issued @ $9.94 = $121,190,468 may be raised in March 2015, assuming full exercise of warrants which will occur if share price is still over $9.94. Proceeds are contractually required to repurchase debentures

[FFHwatcher1]

Basically, I bought the warrants because I believe the time value is significantly mis-priced.  Also, I get significant leverage.   The share price has popped a lot and the time value has barely moved.  It is only 1.5 cents and it could be as much as 5-10 cents.   That would put a target market value closer to $0.25+ for the warrants PLUS (or minus) whatever the stock price

[llennn]

warrant holder is not obligated, which is not to say cannot sell back to the Company, can u send back a sit-rep on who the owners are by precentage of warrants? The gauge is .11 to .33 for the warrants, unless other wise noted in future. Remember also 1 penny profit in total is worth 8.5 million for 2nd Q, it could be a lufthansa situation.>

[kmu2013]

Good analysis - maybe I can expand on this a bit further: A warrant is essentially the same as a European call option, and should be priced as such.  If I price these warrants using Black-Scholes on a bloomberg terminal, i get a fair value of $0.26 - assuming historical volatilty. This is a signifcant premium to the current $0.20 they are trading at.  I've thought

[nerzaa]

warrant price looks right to me.  it's trading at its intrinsic value + a bit time value: 13.54/20-0.5=0.177, 13.95/20-0.5=0.198    

[llennn]

KMU forget black-scholes, these warrants could go to .3975 to .4975 which would be app 148% add on with commons going to a 85.7% add on, the direct will hinge on Q2, if all warrants are converted FFH will only gain about a 1% increase in ownership to about 21.6% instead of 20.7% at a cost of 28 million appx, so someone could in theory double their % return with warrants, unknowns are Q1 and Q2>

[nerzaa]

@llennn what the #@#$ are you smoking?? 12.15/20=0.6075; 22/20=1.1 even using your assumption, which is wrong. the warrant is in the money with stock price over 12.15. now let me tell you how much fairfax and other partners paid for their warrants. ZERO. that's right, they paid 0. recap was done in 2 parts: 1. $100m of bought financing made up of 2 type of units: 65k units of class A

[llennn]

Raz a ma taz, What is the cost for FFH to convert a 20 warrants to a share? >

[kmu2013]

i also would like to know what Ilennn is smoking

[llennn]

Im smoking fresh sea air, how about you stuck in the city, sorry about raz bellow, I still going with .3975 or more your not looking at the historical shares outstanding and it cost to go from warrants to a share and from what I seen in Q1 it should be good and the unknown now is Q2, I would keep the warrants at this time if I had some.>

[nerzaa]

quote from llennn: "It looks like the price per share would have to be a solid 22 to 26 dollars, for the conversion of the warrants makes cents, FFH has to pay 28 million just on conversion cost, .11 cents at purchase for warrants equals 2.20 plus conversion cost 9.95 equals 12.15, therefore the pps needs to be a solid 22 dollars to 26 dollars in order to convert someone is not going to pay 9

[llennn]

You should be happy it saves .22 cents a share, throw the warrants in the trunk and move on, we are all shareholders now, I was not a fan of the warrants any how and I did not see a basken shark, if I do I,ll be sure to let you know

[llennn]

I don't think I was wrong, they just figured a better way to convert which is pay 10 to get 4, all  holders of w paid,it makes very good (cents) . 22