tag:blogger.com,1999:blog-5389144729834496735.post868473935542472917..comments2024-03-17T05:15:55.634-04:00Comments on The Brooklyn Investor: Bank TARP WarrantsUnknownnoreply@blogger.comBlogger7125tag:blogger.com,1999:blog-5389144729834496735.post-74262764666236033282014-04-17T08:51:13.942-04:002014-04-17T08:51:13.942-04:00Thanks that is very helpful.
Cheers
DrewThanks that is very helpful.<br /><br />Cheers<br /><br />DrewDhttps://www.blogger.com/profile/04420192052240770074noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-90804360568463771202014-04-15T09:38:03.412-04:002014-04-15T09:38:03.412-04:00No, I don't think you are missing anything. T...No, I don't think you are missing anything. The deeper in the money these things go, the closer to parity it will trade at, and even a discount if you consider dividends. Imagine a warrant with a zero strike price. The only difference would be that the stock holder gets dividends and the warrant holder doesn't. If there are dividends, then the warrants would trade at a discount to reflect that. <br /><br />The TARP warrants have a dividend adjustment, but for COF, that's $0.375/share or something, which comes to around 2% yield (if that is actually paid) that the warrant holders wouldn't get (adjustments is for amounts above that). So you are effectively 'borrowing' 60% of purchase amount and the cost of financing that is the dividend you would get if you owned the stock but don't if you owned the warrants. <br /><br />So it sort of looks like an anomaly here but isn't. <br /><br />I might have got some detail wrong here, but that's basically how it works; the dividends you don't get as a warrant holder is the cost of financing you incur to get the benefit of the leverage. kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-65073099867971600712014-04-15T08:22:14.256-04:002014-04-15T08:22:14.256-04:00Hi Brooklyn Investor,
I love your analysis and I ...Hi Brooklyn Investor,<br /><br />I love your analysis and I was wondering if you had any thoughts on COF warrants. At a price of 32, with a strike price of 42 and COF at 74, there doesn't seem to be any time value at all in the warrants. This seems like a bit of anomaly, Is there something I am missing here.<br /><br />Thanks<br /><br />DrewDhttps://www.blogger.com/profile/04420192052240770074noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-62981342554747653842014-03-27T15:46:24.056-04:002014-03-27T15:46:24.056-04:00Hi, I haven't looked closely recently, but I t...Hi, I haven't looked closely recently, but I think the TARP warrants are good. I tended to play banks with the LEAPS as I like a little bit shorter maturities. <br /><br />As for percentage of portfolio, I don't know. That really depends. Banks have run up quite a bit in the past few years, so it's not as cheap as they used to be even thought they're still attractive. <br /><br />kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-43084379033165227332014-03-27T12:58:39.959-04:002014-03-27T12:58:39.959-04:00Hi Brooklyn Investor,
I love your blog- thanks for...Hi Brooklyn Investor,<br />I love your blog- thanks for your efforts. I was wondering what you think of TARP warrants today?<br />Do you own any and what % of portfolio would you feel comfortable with? <br />Cheers,<br />Matt Anonymoushttps://www.blogger.com/profile/17592571206414282628noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-83829315163550925812013-09-04T18:41:31.764-04:002013-09-04T18:41:31.764-04:00Hi,
Yes, if you google TARP warrant adjustments,...Hi, <br /><br />Yes, if you google TARP warrant adjustments, you will see it discussed. I don't have the link to the actual filings that explain it off hand, but you can find it and read it there. <br /><br />Thanks for reading. <br />kkhttps://www.blogger.com/profile/06299974418283948333noreply@blogger.comtag:blogger.com,1999:blog-5389144729834496735.post-5815006177989153642013-09-04T14:08:33.225-04:002013-09-04T14:08:33.225-04:00I understood the strike price of these warrants wo...I understood the strike price of these warrants would be lowered by each dividend paid since the warrants were issued. True?Anonymousnoreply@blogger.com