Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : American International Petroleum Corp -- Ignore unavailable to you. Want to Upgrade?

To: MARIO PASQUA who wrote (5317)	11/24/1997 9:03:00 PM
From: Ken Wesley	Read Replies (3) \| Respond to of 11888

I am planning to buy more warrants or common but need to know if the following information is correct. Why not buy the warrants for more appreciation? Let's look at this senario: Common at $5 and warrants at $3 (usually a $2 spread give or take a fraction). With $15000 to invest, Investor A buys 3000 shares of common and Investor B buys 5000 shares of warrants. A JV is announced and the common goes to $15 a share and the warrants to $13 a share. Investor A is worth $45,000 (3000 shares times $15) and Investor B is worth $65,000 (5000 shares times $13). Investor B makes an extra $15,000 with the same amount of money invested. It looks like I would have more leverage with the warrants but if the stock price goes down I stand to lose more of my investment. (Better yet--the common goes to $30 and and warrant to $28. Investor A is worth $90,000 and Investor B is worth $140,000). I believe that as the March conversion date approaches the spread between the common and warrants will be about $4, but until then the warrants are traded just as the commons are. (no conversion is neccessary unless you are holding the warrants on the conversion date). If you think the price is going up within the next 3 months, the warrsnts would be a better investment. If the common stays around $5 over the next 3 months, the warrants gradually drop from $3 to $1 a share. I am quite new at this, so please correct me if I am wrong. Hopefully you or someone with experience in trading warrants can enlighten me on this matter. Ken M