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

To: Peter Singleton who wrote (4672)	4/20/1998 9:30:00 AM
From: Dan O.	Respond to of 9719

Peter, yes, I would choose lgndw over lgnd. I'm looking at a 7-10+ year holding period. Personally I hold both. I bought the common before I was aware of the wts, and I use the common to generate a little income. Selling covered calls, etc. I really don't want to part with them for tax reasons. I've also bought more common on dips when the wts haven't moved as far. They (the wts) are usually not as liquid, and on any given day you may not find a seller willing to meet your size & price. Dan Ogens

To: Peter Singleton who wrote (4672)	4/22/1998 1:48:00 AM
From: Flagrante Delictu	Read Replies (1) \| Respond to of 9719

Peter, Re: LGND or LGNDW My suggestion was that at a differential between LGND & LGNDW of $6.125, the purchase of the warrants was vastly superior to a purchase of a similar number of shares of stock. This opinion is not held by the other posters who have provided you with academic mumbo jumbo about the volatility & riskiness of the warrants compared to the stock. The examination of which is the better purchase is too simple for the academics to comprehend. Suppose you had a choice of buying 2 things, both of which would provide equal satisfaction, if things went as expected. Suppose also, that if things went down the tubes, one of the 2 things would be guaranteed not to lose any more than the other, but could possibly lose as much 40% less than the other under certain circumstances. Then suppose that you could buy one of these 2 things with a lower initial cash outlay. Finally, if there is one with the lower cash outlay, the exactly similar chance for the same dollar profit, but the chance of losing a lot less if the future values of these things turned sour & yet the certainty of not losing any more than the other thing, would you choose this one or would you rather have the one that requires you to put up more cash, won't give you any greater gain, & will lose no less than, but possibly 40% more than, the first one? If you would rather have the first one, then, you would prefer LGNDW. My preceding posts on the LGNDW vs LGND on this thread, if read carefully, should provide any other details you need to know. This analysis is based on the assumption that the value of the initial cost savings of $6.125 per share, resulting from a warrant purchase for $6.125 less than the stock, is the same as what the interest cost would have been from borrowing $6.125 per share from your margin account from now until the warrant expiration in 6/3/00 ,as well as holding the position until the warrant expiration unless the stock goes to zero before then. At that unhappy point you will be significantly happier with your warrant purchase than will those be who have purchased the stock.