I don't have to remember off the top of my head because I was stupid enough to buy some of the WHT warrants and still hold them. They don't have a "strike" price. The conversion premium is $1.65 Canadian, or currently $1.22 $US. So you cash in your warrant, you pay $1.22, and you get a share of WHT currently valued at $1.00, only losing 22 cents per share in the process, plus whatever you paid for the warrant, about 35 cents currently, so you lose a total of 57 cents per share.
Now if you buy WHT at$1.00 (US) and it doubles, you double your money.
If you buy the warrant at, say a current price of about 35 cents, and WHT goes to $2.00, you can buy one share of WHT of WHT for US $1.22 (provided the loonie does not rise any more). That means you pay $1.57 for something worth $2.00, giving you a profit of 43 cents, so that you have a profit of 122 % instead of 100% by owning the warrant instead of the stock.
So if you are SURE that WHT is going to double, and you can get the warrant currently for 35 cents, it is a good buy.
If you are holding warrants bought at 40 cents or more, however, you are not going to make as much money on WHT as you would if you simply held the stock, unless the stock MORE than doubles or unless the Canadian dollar drops back dramatically in value.
And anyone who bought the warrants at 60 cents is just an outright loser, unless the stock triples, in which case you would double your money, more or less, while the holder of the stock itself would triple his or her money.
Now suppose the stock increases fivefold. Then my warrants, currently worth about 35 cents, would be worth maybe $3.80, or about ten times their current value. At last we are really talking big gains as compared to the stock.
So I heartily recommend the WHT warrants to anyone who knows for sure that the stock will be worth five times what it is now before the warrants expire in 2007. |
