Finally investigated the warrant, HOPRW (my PC now works <G> - had the B1 boot sector virus!).
Long term: Definitely stay with the stock.
Reasons: Let's looks at an example of "the perfect" warrant. Say a stock is trading at $20 a share. Then the company issues warrants: The right to buy a share of stock at a given tinme for a given price. In this example we'll 2 years, at $15 per share. The cost of the warrant at issue would be $5 ($20 - $15). If the stock were to go to $40 per share, the stock holders would have made 2X their investment. The warrant holders, however, wopuld have made 5X their investment! (40-15=25, which is 5 times the $5 they paid for the warrant).
A few things to keep in mnd about warrants: They react much more severely thatn the stock does (both up & down), and more importantly - warrant holders do NOT own the company, cannot vote, etc!
Now back to HOPR. IMO, the warrant looks bad because both the stock and the warrant are really the same price when compared to the $5.75 strike price (I check back to when the warrant was issued. The srock was around $7, and the warrant at around $1.20). Therefore, you will realize the same gain with either the stock or warrant, and the stock is a much sounder investment! (you can vote and stuff).
Short term, however, i'm not sure. You would really have to watch the warrant closely. Get out when she goes up (which she will do - probably on pace, if not better than the issue).
Just my opinion\2 cents.
Any comments??? |
