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Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: John O'Neill who wrote (14168)	2/3/1998 8:46:00 PM
From: Russian Bear	Read Replies (1) \| Respond to of 32384

<<What are the restrictions on LGNDW? Does one have to hold them ; when do they expire. Why would they dump the warrants when they could convert them to LGNG stock and sell that?>> John, There are no particular "restrictions," per se, on LGNDW. You do not necessarily need to hold them until expiration, June 2000, unless you choose to do so. You can sell them at any time between now and then, with the caveat that the market in LGNDW is rather less liquid than the market in LGND. Therefore, its bid-ask spread is substantially higher than LGND's, on a percentage basis. Also, if your position is large, you would be forced to go to some effort, entering and exiting piecemeal. My solution to the above problem, for what it is worth, is simply to buy and hold for a long, long time, rather than trade (please, P2, no Buffetology jokes. ;-)) Days like today, needless to say, have a way of making my strategy seem... shall we say "suboptimal?" :-( As for the matter of conversion vs. "dumping," as long as there remains any time premium at all in the warrants (i.e., as long as the price of the warrant, plus 7.125, is greater than the price of the stock,) it is advantageous to sell warrants outright, rather than first to convert them into stock. Note, that the time premium should always be positive (approaching zero towards expiration, but never, never going negative.) Warrants generally behave (more or - like today - less) in accordance with the laws of options pricing, e.g. the Black-Scholes and other, similar models. When LGND experienced its period of very heavy trading, two to three weeks ago, I suspected that there was some conversion of warrants behind it, despite the above logic. Today brought the proverbial "reality check." I no longer think that was the case. For what little my opinion is worth, John, let me strongly urge you to take a long, hard look at LGNDW, at these prices. It is an outstanding bargain, both in absolute terms, and relative to the common. Good luck, RB