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Technology Stocks : INTCW
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To: AHF who wrote (12)1/2/1997 4:10:00 PM
From: Andrew Chow   of 78
 
> If one planned to hold Intel until 3/98 and then sell, though, it would seem the warrants are the play (if you're bullish).

As I said, I don't come across too many folks that are that bullish on INTC. They say they are, but I've met very few that have 100% of their assets in INTC and then want to buy even more. That's the only logical case when buying INTCW instead of INTC makes sense.

>Your math works in favor of buying the common -- only if the owner plans to hold it past the 3/98 expiration date, right?

Wrong. Actually if you are certain that you are going to sell your Intel exposure on 3/98, then there is a distinct tax advantage to buying INTC on margin as opposed to buying INTCW. With INTC on margin your borrowing costs are deductible immediately as ordinary income. With INTCW your borrowing costs are only deductiblefor tax year 1998, and then only in the form of lower capital gains. This is because the borrowing costs are embedded into the INTCW price as a premium on top of the difference between the conversion price and INTC.
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