Warrants - Should You Ever Exercise
Frequently, we
are asked
whether warrants
should be
exercised if
they are trading
in the money.
Of course, the
first event that
must happen is
that the common
shares are
trading above
the exercise
price of the
warrants which
means the
warrants are 'in
the money'.
My answer to the
exercise or not,
is always the
same, WHY?
Why would you
want to exercise
the warrants?
For U.S.
investors, this
is basically a
non-issue
because
virtually all of
the warrants
trading on the
resource shares
are on Canadian
companies and
the warrants are
not registered
in the U.S.
U.S. investors
can buy and sell
the warrants,
but, not
exercise them,
no problem.
For Canadian
investors, yes,
you could
exercise the
warrants, but
why?
If you own
warrants of a
company you
like, you will
need to have
your brokerage
firm send the
warrant
certificate to
the company's
transfer agent
along with the
exercise price
at which point
they would send
you the common
shares of the
company. But
why, we ask?
As a Canadian
investor, if you
own warrants
which are 'in
the money', we
see just selling
the warrants in
the market and
if you really
like the company
and want to
continue with
them, then just
purchase the
common shares.
Simple, clean
and saves a lot
of time and
paperwork and
you are in the
exact same
position.
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Dudley
Dudley Pierce Baker –
Owner/Editor –
Guadalajara/Ajijic,
Mexico
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Webmaster and
Administrative
Assistant –
Phoenix, USA
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Assistant Editor
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