How to Evaluate Warrants

The Warrant Report April 30, 2012 How to Evaluate Warrants How to Evaluate Warrants…… Let’s get back to warrants, which ones, why, etc. The first issue or question is, a warrant on what? You must like the specific company, its management, its properties, geographical locations and its prospects for a rising share price. Only then should investors ask the next question, ‘does this company have any long-term warrants?’ If the answer is yes, the company does have a long-term warrant trading, great, now you can get down to analyzing the warrant. What is the remaining life until expiration? What is the exercise price? What does the leverage look like? Of course, for our subscribers, all of this information is right at your fingertips and included in our detailed Warrant Database. Timing and Leverage: Our preference is that a warrant should have approximately 2 years or more of remaining life before we would consider it for investment. Remember we need time for the markets to turn upwards and time for the company to execute on its business plans, so a minimum of 2 years is a good idea, the more time the better. Secondly, we look at the potential leverage which the warrant will command as the share price increases. On the leverage, we follow the views and teachings of Sidney Fried (see our Learning Center for more details). The issue of leverage is merely to ask the question, if the share price goes up to x, xx, xxx, or xxxx, … Continue reading