OWENS CORNING "A" AND "B" WARRANTS EXPIRING OCTOBER 31, 2013
Owens Corning (OC) shares, last around $35.50 or so, are very volatile and in turn these 2 classes of warrants are super-volatile. I've been a buyer of the "B" warrants (symbol: OC-WTB at Yahoo Finance; or OC.WS.B for many online brokerage sites), which have a $45.25 exercise price and tighter bid/ask prices than the "A" warrants, which have a $43.00 exercise price. The scenario I'd like to see is OC shares continuing to rise into 2013 as the estimated EPS projections are currently at $2.58E for 2013. Assigning a forward P/E of 18 to that $2.58E estimated EPS for 2013 extrapolates to a theoretical stock price of $46.44. Not an easy stock or pair of warrants to own or trade, in my opinion. They give you a roller coaster ride. I bought "B" warrants at 0.83 and 1.02 this past week. After my 1.02 purchase, the warrants dipped as low as $0.70. Then they rebounded to $1.03, then back to $0.82 or so. Now the warrants have rebounded to as high as $1.27 today with a close at $1.21. I sold most of my small position into this strength, taking nice profits, percentage wise, along the way. With just over 13 months remaining on both warrants, time decay will start to set in. These warrants were issued as a result of the company emerging from bankruptcy. No chance at all that they will be extended. The very wide bid/ask prices on the "A" warrants (symbol: OCWAW). The Owens Corning website has detailed information on the warrant terms. A very high-risk speculation here. And a very intriguing one in my eyes. Do your own due diligence naturally. |
