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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: rllee who wrote (47732)	5/3/2012 1:34:06 PM
From: Sergio H	Respond to of 78523

I did not own any warrants prior to your post, but I am buying now. Thanks for the reminder. Barron's had a good article on ROIC a few months offering an opinion on the warrants: What's potentially more interesting than the shares, however, are its warrants, which trade under the symbol ROICW. Each entitles the holder to buy one ROI share at $12 before Oct. 23, 2014; they expire after that date. Given the stock's rise, the warrants are becoming attractive to some investors. The warrants closed around 85 cents last week, down from a high of 95 cents on Feb. 8. ROI is run by Stewart Tanz, whom Robert Fields, a co-portfolio manager of hedge fund Ana Partners calls a well-respected CEO. He says the company is underleveraged and is in a good position to continue growing. ROI has about $700 million in assets to $170 million in debt, for a total debt to assets ratio of 25%. Ana Partners has lately been buying the warrants, The stock is effectively trading at the exercise price. Assuming ROI continues to lift its profits in the next two years, Fields figures ROI could add $4 to $5 to its stock price before the exercise period ends. The firm, he adds, is motivated to do some kind of deal to take out some of the warrants or delay or stagger their exercise period because of the potential dilution. There are about 41.4 million warrants outstanding, compared with the 50 million-share float. In the most recent fourth-quarter earnings call, the company alluded to working with warrant holders to "structure a mutually beneficial transaction." Fields says the warrants are worth however much the stock price moves up from current levels. The higher the share price above $12, the more valuable the warrants. If the stock rises 25%, to $15, the warrants could more than triple. But the risk is much greater too, as they could expire worthless in 2014 if the stock doesn't top $12.