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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: InAndOut who wrote (48722)	2/24/1999 5:25:00 PM
From: Eggolas Moria	Respond to of 132070

<<I am a new investor, can you or anyone else tell me what a warrant is?>> A company-issued certificate that is an option to purchase a specified number of shares at a specified price by a certain date. It can trade on the open market.

To: InAndOut who wrote (48722)	2/24/1999 6:13:00 PM
From: Knighty Tin	Respond to of 132070

In and Out, Assuming you are not talking about the outstanding ones for my arrest, dead or alive, I can help you. <g> A warrant is very similar to an option, but usually for a much longer length of time. A regular warrant allows the owner to purchase a stock at a certain price for a certain amount of time. For example, you may buy a warrant on a stock selling at $100, that allows you to buy at $110 for the next seven years (stock splits are adjusted for). Most regular warrants start out as add-ons to bond issues nobody wants. The co. goes to mutual fund A and says, we'd like to sell you our bonds with 8% interest for 20 years, and the fund manager yawns or laughs or makes inappropriate finger gestures, as I often did. The co. then says, for each bond you buy, you get a warrant. I may or may not want it, but it is a sweetener. A put warrant is more rare and is usually a private transaction between a co. and some deep pocketed investors. The investors get the right to sell the stock to the co. at a set price over a certain period of time. I have never liked these because, if the best thing in the world happens for a put holder, a bankruptcy at the co., your put warrant is suddenly no good because the co. has no cash with which to make good. I'd rather buy a listed put from a Morgan Stanley customer because they will make it good and profitable if the put co. goes belly up. MB