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Biotech / Medical : QDEL - Quidel more quick diagnosis
QDEL 27.10-2.2%Nov 4 3:59 PM EST
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To: steve dietrich who wrote (1655)2/23/2000 1:23:00 PM
From: Bill Ounce  Read Replies (1) of 1693
 
re: warrants

I'm not a great authority on warrants, so don't take this as "investment advise"... :-)

Quidel recently registered the shares, so it looks like you can trade them in whenever you want to:
quidel.com

I don't remember the details on the warrant contract. I got them originally for purely speculative reasons a few years ago, and been rewarded for a patient long-term guess. Time to read up on the contract again or call Quidel investor relations for exact details.

Some warrants are automatically called in by the company when the underlying stock rises to a defined level, while others exist much like a option until the expiration date. More complicated contracts could also define windows on when they can be exercised for stock.

Do your own DD to verify that QDELW will not force you to redeem them early and you can exercise them whenever you want; one QDELW + $7.50 gets you one QDEL.

To me, publicly traded warrants may be viewed as a multi-phase investment vehicle. It's like a long-term call option or LEAP. The early stage is very speculative, the end phase is arbitrage, and there could be several intermediate stages as well. Right now, we're in a "bonus" middle stage where the warrant is "in the money" stock is rapidly rising, with years left before expiration.

For example, if QDEL hits $10 this week, the intrinsic value of QDELW is $2.50 plus more than 2 years of time value. The long term time-value on a rapidly rising stock is why QDELW sells for over $4 (and could sell for more). Compare this to options and LEAPS and you may conclude that this isn't all that expensive.

There was a post on yahoo that gave the following formula to evaluate the warrants -vs- the underlying stock:

X = 7.5/(1-(QDELW/QDEL))

messages.yahoo.com
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