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Strategies & Market Trends : Ride the Tiger with CD

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From: The Vet	11/30/2006 8:17:21 PM
	Read Replies (2) of 313106

Iamgold warrants are still one of the best bargains around IMO.. Even though IMG.WT picked up 5 cents today (moving from $1.65 to $1.70) they got to be even better value as gold increased and IMG improved by 49 cents to close at $10.98. 49 cents on the stock adds over 20 cents to the warrant value. Apparently because the math is not nice round figures buyers have failed to appreciate the value of these deep in the money warrants. You need 2.381 warrants to buy one share for a strike price of $3.75 on or before August 2008. IMG closed today at $10.98. So simple maths shows you that (10.98-3.75)/2.381 = $3.03. That is what the warrant is worth in cash now, ignoring almost 2 years of time value. So the market is selling the warrants for $1.70 that are worth $3.03 as stock at exactly the same time. That's a 78% immediate return that anyone could get right now simply by buying the warrants, exercising them and selling the stock.. Now IMG isn't my favorite gold stock, but it's not bad and everyone must be doing extremely well if they can pass up deals like that! All prices above are Canadian dollars. disclaimer - I own IMG.WT (and I wish I had more)

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