Today with K currently trading @ $10.28 up $0.25 there seems to be an unlimited supply of the K.WT.D warrants available @ $0.375 - TD Securities doing almost all the selling with a several cross trades.
Just wondering what the impact would be on the valuation of these 17-Sept-2014 expiring warrants, with a $21.60 exercise price if Kinross were taken over by another company at say $16.50 (less than exercise price). I believe that new warrants would be issued in the take-over company using a current Black-Scholes valuation.
Back on Feb 3, 2012 the Canadian Warrants site (no updates since then), with K trading @ $11.14, and K.WT.D @ $1.11 gave a fair market value of $4.59 - I realize that 10 months of time has eroded and the share price is approx. $1.00 less, but still with almost 2 years of time value left, these warrants seem quite cheap @ $0.375?
I previously held these warrants, bought in the $1.00 range and count myself lucky to have got out around $0.75, before they plunged, along with K share price down to $0.33 range, then recovered to $0.55, now another plunge over the past month or so.
Just wondering if end of year trading strategy is perhaps at work here - writing off losses etc, with intention of buying back in new year etc?
Any other opinions would be appreciated - I picked up 4,000 warrants today @ $0.375