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Strategies & Market Trends : Value Investing

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To: Madharry who wrote (37558)	4/25/2010 4:16:02 PM
From: Spekulatius	Read Replies (1) of 78507

re Warrant - >>Here is the question: you own warrants in a closed end fund. the close end fund has a nav of 15 and a diluted nav of 13.5. it trades at $10.50. the last date for exercising the warrant is approaching. the warrant allows you to purchase one unit of the closed end fund for $12 and would then give you a new warrant that gives you the right to purchase 1/2 unit for $7.50 for two years. Do you exercise the warrant or not?<< It seems like a no brainer to exercise the warrant and maybe sell some shares later. If you sell the warrant (assuming he warrant trades) right away you are selling in a temporarily depressed market), if you let the warrant expire it's even worse, you get diluted anyways without the benefit of owning more shares.

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