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Biotech / Medical : VD's Model Portfolio & Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: Flagrante Delictu who wrote (4654)	4/20/1998 1:28:00 AM
From: Vector1	Read Replies (1) \| Respond to of 9719

Bernie, The warrant has more risk than an unlevered investment in LGND for the same reason as a margined investment has more risk. Take for example the following assumptions: $10,000 to invest in LGND Warrant price of 9.25 stock price of 15 10,000 invested in the stock gives one approx 666 shares 10,000 invested in the warants gives one approx 1080 warants Assume on the warrant expiration date the stock is trading at $10. Result Stock is worth 6,600 or a loss of 4,400 Warrants are worth 2.88 multiplied by 1,080 or 3,110 for a loss of $6,890. Ofcouse the warrants have more upside if the stock goes up. The difference in our assumptions is that I am assuming the same level of investment in the warrant and the stock. Hope I did the math right, one of my kids has absconded with my HP12c V1