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Re: warrants

By: DigSpace in ALEA | Recommend this post (0)
Sat, 16 Mar 13 12:27 AM | 83 view(s)
Boardmark this board | The Trust Matrix 		Msg. 12905 of 54959
(This msg. is a reply to 12904 by DigSpace)
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part of what is likely making it difficult for Wave to do anything on the equity front is that Wave is largely illiquid at this point. With daily volume of say, 100k actual shares, only $85k in actual money moves around, this is not the sort of liquidity to support anything. So the options market is dry, one can't move meaningful amounts of shares and so on. Who is going to buy a $5m placement when such a placement represents 2 or 3 months or trading volume? Only somebody who believes in the company itself would be inclined to play that game.

So yes, the last buyer bought shares for a somewhat long term horizon (they are unregistered e.g.) and some call this bullish. To me, it as much speaks towards the notion that WAVX is toxic to normal equity funding because of pithy volume and secondary market interest. So in the end, the only place money is going to come from is the odd-ball longer term investors who are going to demand pretty sweet warrants (5 years for half the placement at the same arguably discounted price) and the total size of such efforts will be rather constrained given liquidity issues.


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The above is a reply to the following message:
Re: warrants
By: DigSpace in ALEA
Sat, 16 Mar 13 12:00 AM 		Msg. 12904 of 54959

yes, that is basically what I believe the standard deal is. Flip the exposure, put the warrants under a pillow. Sell well out-of-the-money covered calls against the warrants for 5 years. Even if the warrants prove worthless, there is the covered call revs. Should the equity make a massive move and they get called, well, that is just locking in the silly gain potential the warrants represented.

If one has the coin to play this game it is something my cat could do. Right around the PP Oct 2.5 options moved. Fancy that.

Warrants for 600k shares bags about $500k over 10 cycles of selling calls at 5-10 cents, all of it with no exposure as that was taken off the table at the start.

It is important to note, in this case, the shares are not registered, I don't know who/what it takes to register them, the fees and so on, and what their collateral value is in shorting against the box, selling calls and so on ... but with Wave's normal placements it is definitely dump the investment and ride the warrants and perhaps squeeze some revenue out of the warrants selling option-calls.

Pretty simple, Just ask Romney.


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