Dear Kcchongnz. If I have 1000 units WA purchased at 0.05 and now converted to mother share. Cost to get 1000 mother share is (1000 x 0.10 + 1000 x 0.05 = rm150.) If the mother share is 0.15 or above I should be making a profit margin right.
Yes, theoretically you are right. If you send Wa for conversion and when the converted share come back say 2 weeks time and Marco's share price stays at 16 sen, you make one sen per share. If it does up higher than 16 sen, you even make more. However if Marco share comes down below 15 sen, then you lose.
The advantage of Wa is that you have the right to convert to Marco share but not the obligation. You can wait and see until Wa expires. So Wa besides the intrinsic value of 6 sen per share, it also has some time value.
As Wa is undervalued in relation to the underlying share, it is actually better to hold Wa, if you are interested in Marco's business. The business seems ok to me. However, just don't be too greedy because Robert Wong is not a simple person.
Since i have written a few posts on Marco warrant before, i think I should be responsible to write another post here.
My experience in investing in the Marco warrant is not a good one. Not easy trying to make some money from this laduk. I am glad I didn't lose much. I will avoid investing in any of his companies.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
KAHFIEHLAI
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Posted by KAHFIEHLAI > 2013-06-04 18:58 | Report Abuse
Dear Kcchongnz.
If I have 1000 units WA purchased at 0.05 and now converted to mother share.
Cost to get 1000 mother share is (1000 x 0.10 + 1000 x 0.05 = rm150.)
If the mother share is 0.15 or above I should be making a profit margin right.