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Strategies & Market Trends : Value Investing

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To: TimbaBear who wrote (15961)	12/27/2002 9:46:52 AM
From: sjemmeri	Read Replies (1) of 78644

Timba, I followed you fine up until this point: 'The reorg plan that has been filed indicates that the warrants will entitle the holder of the warrants to buy the common at 125% of Fair Value. Since I don't know what they say fair value will be, for this discussion, I'm going to use .607/share as fair value for the current common stock, because that is what it is for me. So, if I divide .607 by 1.25 (125% = 1.25), I get that the current price should be .485/share.' Doesn't a higher estimate of fair value imply a higher warrant strike price and therefore a lower warrant value? Don't you need to apply Black-Scholes or some other option valuing method at this point? steve

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