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Warrants
Nov 7, 2018 9:52:34 GMT -5
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Post by cjc04 on Nov 7, 2018 9:52:34 GMT -5
now that we’re in the window, I’m interested in hearing opinions on the warrants so I can better understand them.
First the details, price, timeline, how many....
Then opinions on what will happen and why. I keep hearing that the sp could be kept down til they expire, but why? Isn’t a warrant like an option? Wouldn’t the holder want the sp much higher?
Thx
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Post by matt on Nov 7, 2018 11:17:33 GMT -5
The warrants are exercisable for six months from their effective date, which I think puts them out until mid-April. As I can recall, there are 14 million warrants priced at $2.38. If you want to double check that, the most recent 10Q has the details.
As for what will happen, nothing will happen unless the PPS goes above $2.38. You are correct that a warrant is similar to an option, the difference is that a warrant is issued by the company and if exercised will increase the number of shares outstanding while an option is a contract between third parties that does not affect the number of shares. The thing to remember about a warrant is that part of the value is an implied put option in that if the stock price moves lower then the holder will not suffer the loss while if the warrant is exercised and the price moves lower then the holder suffers the price decline like any other shareholder. For this reason, options and warrants are rarely exercised early.
However, if the price goes above $2.38 the holder may go short at that point. Why? If the price later declines down to $2.10 the holder makes 28 cents on their position. If the price increases to $2.50, the holder can exercise the warrants at $2.38 and deliver the new shares to close out the short. Warrants are rarely used in isolation, they are part of a complex portfolio strategy, and because the warrants are held by different holders, not all holders will exercise at the same time. There are essentially an infinite number of ways to construct portfolios and an infinite number of holder payoffs.
All you can say for sure is that so long as the PPS remains below $2.38 nothing much will happen. If the price goes higher than the result is indeterminate in the short term, and if the price stays above $2.38 at the expiration date then expect all the warrants to be exercised at the last minute.
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Warrants
Nov 7, 2018 11:31:36 GMT -5
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Post by cjc04 on Nov 7, 2018 11:31:36 GMT -5
Thanks Matt, I now understand why a warrant holder would short the stock if it went above the strike price, for insurance, and I guess that also explains why they would NOT care/want the sp to take off (like I would a call option) because they’re locked at the price they originally shorted and have to cover with the shares.
Do I remember Mike saying something about the warrant holders being friendly to Mannkind, hinting that they wouldn’t be sold or shorted against? I could be making that up.
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Warrants
Nov 7, 2018 11:41:12 GMT -5
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Post by traderdennis on Nov 7, 2018 11:41:12 GMT -5
Thanks Matt, I now understand why a warrant holder would short the stock if it went above the strike price, for insurance, and I guess that also explains why they would NOT care/want the sp to take off (like I would a call option) because they’re locked at the price they originally shorted and have to cover with the shares. Do I remember Mike saying something about the warrant holders being friendly to Mannkind, hinting that they wouldn’t be sold or shorted against? I could be making that up. Another strategy is to sell calls. Back I September the stock price spiked over 2.50. A warrant holder could of slide 3.00 calls and collected premium. They cover with 2.38 stock so their hope is the price goes up to collect both the initial premium and the. Exercise for a second profit.
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Warrants
Nov 7, 2018 11:47:57 GMT -5
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Post by cjc04 on Nov 7, 2018 11:47:57 GMT -5
Thanks Matt, I now understand why a warrant holder would short the stock if it went above the strike price, for insurance, and I guess that also explains why they would NOT care/want the sp to take off (like I would a call option) because they’re locked at the price they originally shorted and have to cover with the shares. Do I remember Mike saying something about the warrant holders being friendly to Mannkind, hinting that they wouldn’t be sold or shorted against? I could be making that up. Another strategy is to sell calls. Back I September the stock price spiked over 2.50. A warrant holder could of slide 3.00 calls and collected premium. They cover with 2.38 stock so their hope is the price goes up to collect both the initial premium and the. Exercise for a second profit. wouldn't that mean they’re already a shareholder? Or are they selling naked calls, Which is the same as naked shorting
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Post by xanet on Nov 7, 2018 12:00:06 GMT -5
Another strategy is to sell calls. Back I September the stock price spiked over 2.50. A warrant holder could of slide 3.00 calls and collected premium. They cover with 2.38 stock so their hope is the price goes up to collect both the initial premium and the. Exercise for a second profit. wouldn't that mean they’re already a shareholder? Or are they selling naked calls, Which is the same as naked shortingIt's more of a spread. The warrants limit their risk, guaranteeing they will make a profit even if share prices rise above the strike price of the call. They can exercise the warrants at $2.38 to cover the calls exercised at $3. I wouldn't call that naked.
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Warrants
Nov 7, 2018 12:17:31 GMT -5
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Post by cjc04 on Nov 7, 2018 12:17:31 GMT -5
wouldn't that mean they’re already a shareholder? Or are they selling naked calls, Which is the same as naked shortingIt's more of a spread. The warrants limit their risk, guaranteeing they will make a profit even if share prices rise above the strike price of the call. They can exercise the warrants at $2.38 to cover the calls exercised at $3. I wouldn't call that naked. right, but I’m just trying to see a way that the warrant holder would actually want the sp to take off other than just never putting any type of protection on them.
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Post by cjc04 on Nov 7, 2018 12:55:18 GMT -5
I’m really trying to come with an opinion on if we’re locked below $2.38 til they expire, in part by trying to understand what the holders may want.
I’m also a bit concerned that there won’t be much to push or support the sp over the next 6 months. Afrezza sales don’t look like they’ll get it done, and unless there’s some more surprise news & money from RLS, UTHR, or some other partnership, then we currently have enough money to get us thru the 1st quarter. Which means the short squeeze I pray for won’t happen until success somehow guaranteed.
I really hope my concerns are invalid, and we find out soon!!
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Post by xanet on Nov 7, 2018 13:36:46 GMT -5
I’m really trying to come with an opinion on if we’re locked below $2.38 til they expire, in part by trying to understand what the holders may want. I’m also a bit concerned that there won’t be much to push or support the sp over the next 6 months. Afrezza sales don’t look like they’ll get it done, and unless there’s some more surprise news & money from RLS, UTHR, or some other partnership, then we currently have enough money to get us thru the 1st quarter. Which means the short squeeze I pray for won’t happen until success somehow guaranteed. I really hope my concerns are invalid, and we find out soon!! What the holders want is something we have no way of knowing, but I don't think we are locked below $2.38. Anything above $2.38 is profit to the warrant holders who have not shorted, and those who may have shorted are covered by the warrants. Our problem continues to be that there are more shares offered for sale than buyers are willing to buy. But that can change in a hurry.
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Post by traderdennis on Nov 7, 2018 14:36:16 GMT -5
Another strategy is to sell calls. Back I September the stock price spiked over 2.50. A warrant holder could of slide 3.00 calls and collected premium. They cover with 2.38 stock so their hope is the price goes up to collect both the initial premium and the. Exercise for a second profit. wouldn't that mean they’re already a shareholder? Or are they selling naked calls, Which is the same as naked shorting Anyone can sell naked calls provided you have the margin to support it. In the above, they are selling naked calls covered by their warrants.
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Post by traderdennis on Nov 7, 2018 14:41:49 GMT -5
I’m really trying to come with an opinion on if we’re locked below $2.38 til they expire, in part by trying to understand what the holders may want. I’m also a bit concerned that there won’t be much to push or support the sp over the next 6 months. Afrezza sales don’t look like they’ll get it done, and unless there’s some more surprise news & money from RLS, UTHR, or some other partnership, then we currently have enough money to get us thru the 1st quarter. Which means the short squeeze I pray for won’t happen until success somehow guaranteed. I really hope my concerns are invalid, and we find out soon!! The warrant holders have most likely either sold short on Sept 5th when the price went as high as $3.04. They probably are covering now. Or they opened short calls in the 2, 3, 5, and 7 dollar range for January expirations. There is a shit ton of those open, around 17 million shares worth the last time I checked and I would guess many of them were opened short by the warrant holders. They would like to have the stock close at option strike so they can rinse and repeat for march and april expirations.
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Post by ryster505 on Nov 7, 2018 17:40:45 GMT -5
Well, putting all the confusion aside. The right news at the right time renders all of this bullshit useless and in turn we win! God what I wouldn’t give for Mannkind to pull a play from the AMRN book right about now sp wise.
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Post by sportsrancho on Nov 7, 2018 18:37:43 GMT -5
Well, putting all the confusion aside. The right news at the right time renders all of this bullshit useless and in turn we win! God what I wouldn’t give for Mannkind to pull a play from the AMRN book right about now sp wise. Yeah I heard from a little birdie that Mike’s not at all worried about the warrants, in fact I don’t think Mike is worried at all :-)
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Post by agedhippie on Nov 7, 2018 18:40:08 GMT -5
Companies can also sometimes buy out the warrants. If they expect the shares to rise dramatically they don't want the warrants exercised now at a low price, they want to be able to sell that stock later at the new higher price. That requires the company to have a lot of faith where the price is going, and the money to do the purchase with. Warrant holders then have a decision to make...
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Post by mnkdfann on Nov 7, 2018 19:27:30 GMT -5
Well, putting all the confusion aside. The right news at the right time renders all of this bullshit useless and in turn we win! God what I wouldn’t give for Mannkind to pull a play from the AMRN book right about now sp wise. Yeah I heard from a little birdie that Mike’s not at all worried about the warrants, in fact I don’t think Mike is worried at all :-) I would hope not. Why would Mike have any reason to be worried in the first place? Mannkind sold the warrants and / or used the warrants as a sweetener to sell shares (I forget if it was one or the other or a combination of both). They did their job. If Mannkind sells more shares down the road by having the warrants exercised, great. If not, it can always sell shares later in a separate offering. Either way, I see no reason why Mike would have any cause to worry. Retail shareholders, well, they may (or may not) have a different point of view than Mike. It probably depends who you ask, and what their short term expectations are.
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