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Technology Stocks : Nam Tai Elec. (NTAI)
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To: David Leith who wrote (1305)3/26/1998 5:13:00 PM
From: DanD   of 1696
 
David,
I think we are both saying the same thing just different ways. I am also positing a bullish scenario and that the price will revisit the 20+ level in the near future (at least in the lifetime of the warrant). You are probably correct on the dilution effect and the warrant exersize effect.
But I believe what happens then is really the interesting part and that the valuations for now are not nearly as affected. When the stock reaches 25.5 it becomes a 60 day warrant (the 20 days are 20 trading days therefor 30 calender + another 30 for the call back grace period). but if it drops below that price it then becomes a full time warrant again ie the laws of probability are still in affect. so until it is recalled in my opinion it stays at full time and the valuations are under what they should be.
I think some big player has recognized this and bought a huge bunch of the warrants not to long ago. I beleive 200k plus were sold at prices as high as 4.5. Either that or Nam Tai itself repurchased a bunch.
To make the point once again the recent price surge (sputter to some) has taken the price of the stock from around 15 to around 17.5
a ~15% gain the warrants have gone from 2.5 to 3.5 ~29% gain. The price gain might subside in the warrants if the stock volatility changes, but I think this is an indication of the opportunity I have been talking about and in a very bullish scenario -- a quick climb in price like Nam Tai has had in the past -- there is a higher reward for the warrants than the stock, but also greater risk.

Dan D
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