Anyone else holding warrants (TCHCZ)? Here is my current valuation -- comments welcome | TCHC Message Board Posts

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Msg  8 of 12  at  4/26/2007 10:17:12 PM  by

averagetrader


Anyone else holding warrants (TCHCZ)? Here is my current valuation -- comments welcome

Anyone still follow this board?  Anyone else by chance holding the warrants?
 
I’m sure there is a better way to valuate the warrants, but since I don’t know what that is …. the only way it makes sense to me is to convert the warrants to common, then calculate the premium. I used today’s closing price for my math. Oddly enough, the warrants have maintained a fairly consistent premium, even if only on a 100 share lots.

8.75 today’s warrant close
+12.75 exercise price
----
= 21.50 for a share of common for the warrant holders

- 20.00 today’s close on the common (round up a penny to make this easy)
------
= $1.50 premium or 7.5% --- 1.50 / 20 =.075

Assume the warrants maintain a 7.5% premium on the common (ideas on what the curve on the premium might look like as we get closer to expiration would be appreciated)

Say earnings next week are good and the common rises another 7.5% and gets to $21.50 (…also happens to be the point today where the warrants would have zero premium),

a 7.5% premium would be $1.61 (.075 * 21.50 = $1.61) so $23.11 ($21.50 + $1.61 premium) for a share of common if trading the warrants.

23.11
- 12.75 (back out the exercise price)
-----
10.36 warrant price if the common trades at $21.50 assuming the warrants maintain a 7.5% premium. That’s 18.5% from today’s close.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Or really good earnings next week…
Say the common gets to $25 and the warrants maintain a 7.5% premium

26.875 for a share of common for the warrant holders (.075 * 25 ) + 25

26.875
- 12.75 back out the exercise price
-----------
14.125 warrant price if the common trades at 25 assuming the warrants maintain a 7.5% premium. That’s + 61.5% from today’s close.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Say we hit the 35$ price target…. Just for fun….

37.625 for the warrants holders
- 12.75
----------------
24.875 warrant price if the common trades at 35 assuming the warrants maintained a 7.5% premium. That’s + 284% from today’s close...

The math the going other direction is fugly. A miss and another CC from a poker tournament would be painful….

Comments welcome.


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Msg # Subject Author Recs Date Posted
9 Re: Anyone else holding warrants (TCHCZ)? Here is my current valuation -- comments welcome averagetrader 0 4/26/2007 10:37:58 PM


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