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

To: Russian Bear who wrote (14441)	2/8/1998 10:00:00 AM
From: tonyt	Read Replies (2) \| Respond to of 32384

> I don't understand what you meant by that. Given that LGNDW clearly > outperformed LGND on Friday (24% vs. 14%,) how can a double-weighted > LGNDW position have been inferior to a double-weighted LGND > position on that day? Russian, I'm assumuing that 50% is given to warrants for margin. Please let me know if it is 30% Here's the calculation (the purchase was on the date that Bernie requested that I show 'proof'). With 6,000 to invest, 1,000 shares bought on margin has a profit of $1,625 and 2,000 warrants on margin $1,500 (both excluding commissions). Stock Warrant War/Mgn ======= ====== ======= Holding 1,000 1,000 2,000 ------- ------ ------ Value at 2/6/98 (bid) $12,875 $6,750 13,500 Purchase price (see below) $ 5,625 $6,000 6,000 Less Margin Loan $ 5,625 n/a 6,000 Less Margin Interest (1 day) 1 n/m n/m ------- ------ ------ Profit $ 1,624 $ 750 1,500 ======= ====== ====== ---------------------------------------------------------------- Cost to date of exercise: Stock Warrant War/Mgn ($11.25) ($6.00) ($6.00) -------- --------- -------- Cash Paid (Stock pur on margin) 5,625.00 6,000.00 3,000.00 Margin Interest (use 8%) 1,150.00 n/a 620.00 Cash earned on excess funds(5%) 75.00 n/a n/a Exercise of warrant 7,125.00 7,125.00 Margin Loan 5,625.00 n/a 3,000.00 --------- --------- --------- Total cost 12,475.00 13,125.00 13,745.00 ========= ========= =========

To: Russian Bear who wrote (14441)	2/8/1998 10:12:00 AM
From: tonyt	Read Replies (1) \| Respond to of 32384

> The condition you are setting, "...wants to control 1000 shares of > Ligand," ensures that yours is the right answer. That condition was always there, yet there was an overwhelming number of posts that said that it was not the right answer. Anyway, as I've also shown, even controling 2,000 shares by margining the warrants still produced less gain (in one day)than buying 1,000 shares on margin. > But, the one you pose is not the only relevant question, in my view. > Another, question, equally valid, is whether or not LGNDW is > appropriate for a long term Ligand bull with a given amount of money > (on margin, or otherwise) to invest. I don't understand this statment. That was what was being discussed -- With $6,000 to invest for 28 months, should I buy LGND or LGNDW. Granted, I did not show the cost of LGNDW on margin, so I've provided it at the end of this post (clearly, "a long term Ligand bull with a given amount of money (on margin, or otherwise) to invest" should buy the stock. > Nevertheless, I agree that the subject of your hypothetical, who > wants to control 1000 shares of LGND -- no more and no less -- does > best to simply buy common. As I've shown, even when margining the warrants, its best to buy the stock. Cost of Investment: Stock Warrant War/Mgn ($11.25) ($6.00) ($6.00) -------- --------- -------- Cash Paid (Stock pur on margin) 5,625.00 6,000.00 3,000.00 Margin Interest (use 8%) 1,150.00 n/a 620.00 Cash earned on excess funds(5%) 75.00 n/a n/a Exercise of warrant 7,125.00 7,125.00 Margin Loan 5,625.00 n/a 3,000.00 --------- --------- --------- Total cost 12,475.00 13,125.00 13,745.00 ========= ========= =========