Ok... Warrants 101.
Warrants come with a strike price and an expiry date. In the case of the BWR warrants, Jan 28 2009, $1. This means that up until that date, you can phone your broker and buy BWR common stock for a dollar. Got that?
Since the stock price of BWR is over a dollar, the warrants are "in the money". As time approaches 2009, the warrants will trade at their true value, the difference between the stock price and the "strike" price. Warrants can expire worthless.
The EPM warrants are "out of the money", (2010, 1.20 strike price) but have 3 years to maybe become worth something, so they aren't free. In fact, they have a time premium based on the probability you will make money on them. How probable? Well, two guys won the Nobel prize for figuring that one out.
"overvalued" is relative to that probability, and is somewhat difficult to justify.
Hope that helps.
CD |
