Kingfish - Warrants

[keerti]

Hi,

New warrants Issue
Record Date: 30 April 2025
Excercise Price: $1.35 (adjusted to future dividends)
Current price: $1.28

It has corrected a lot and I reckon buying shares makes more sense than warrants.

Happy Investing...

[Basil]

Sadly, and this is something that has not been reported on the other channel, at the last Barramundi annual meeting they said their revised approach for the group is to only make new warrant issues at NTA, not at the prevailing share price at the time the warrants are issued.  With the shares usually trading at a discount to NTA, this means warrants in the future are less likely to be in the money at exercise time.

[mike2023]

I never noticed that. The current nta minus dividend would make them in the money today. Hopefully some share price appreciation makes it even more attractive in 12 months.

[mike2023]

Sadly, and this is something that has not been reported on the other channel, at the last Barramundi annual meeting they said their revised approach for the group is to only make new warrant issues at NTA, not at the prevailing share price at the time the warrants are issued.  With the shares usually trading at a discount to NTA, this means warrants in the future are less likely to be in the money at exercise time.

Did they issue them at share price previously? I honestly have not paid attention the last two. Sold as soon as I had them.

[Basil]

Did they issue them at share price previously? I honestly have not paid attention the last two. Sold as soon as I had them.

Previously, they have generally issued them at the prevailing share price at the time.  Now, its NTA.

[Ferg]

March KFL report is out:
https://www.nzx.com/announcements/450556

Looks like they have been building a position in MCY faster than I predicted.  Well done getting out of RYM.

[winner (n)]

Quarterly newsletter out

Fund down $42m since December ..suppose we all share pain lol

Looks like reduced number of shares in Contact by about 40% and put the $14m into Mercury
Reduced DGL holding by 8% (number of shares)
Got 10% less A2 shares
Got 9% more SUM shares and tossed RYM out

[Ferg]

Reduced DGL holding by 8% (number of shares)

I have been monitoring the daily volumes on DGL and this reduction surprises me.  I wonder if it is a case of rounding to 1 dp which is throwing this out.

Consider the share holdings if Dec 24 was 1.151% rounded up to 1.2% and Mar 25 was 1.149% rounded down to 1.1%...the number of shares barely shifts.

[winner (n)]

I have been monitoring the daily volumes on DGL and this reduction surprises me.  I wonder if it is a case of rounding to 1 dp which is throwing this out.

Consider the share holdings if Dec 24 was 1.151% rounded up to 1.2% and Mar 25 was 1.149% rounded down to 1.1%...the number of shares barely shifts.

Could well be the case Ferg

[Ferg]

Or it could be 1.249% in Dec 24 reducing to 1.051% in Mar 25.  Quite a different picture.  We just have to work with what we have so it looks like an 8% reduction for DGL for now.

[Basil]

New warrants kicked off trading on Friday with solid volume and closed at 2.5 cps which I thought was too cheap so I put my hand up for some more.  (Got some for free due to KFL shareholding).  Face value is $1.35 however the exercise price is adjusted for dividends paid on KFL ordinary shares over the next year.

My estimate of current NTA is $1.36 so 8% of that is 11 cps and my early estimate of the exercise price of these warrants is $1.24 on 1 May 2026.  That compares to an estimated NTA of ~ $1.36 as at close on Friday and share price closed at $1.27. 

The NZX50 is down ~ 7% year to date. Warrants appear to confer a very cheap leveraged entry into a possible recovery in the NZX50 over the next year.  Hopefully the RBNZ cuts by 50 bps on 28 May to help hopefully, avoid yet another winter of discontent with the economy.

[Basil]

https://api.nzx.com/public/announcement/451284/attachment/443012/451284-443012.pdf

NTA up a very decent ~ 7 cps just in them last week to $1.375.  Warrants look very interesting to me with a likely exercise price of $1.24 and a whole year to run.
Shares at a very decent 8% discount to NTA too.  Disc: I have a bob each way with a few of each.

[Basil]

Added more warrants today.  Too cheap and a whole year to run gives great optionality on a recovery in the NZX.

[Basil]

Huge moves overnight on international markets as China and the US reach a provisional accord on tariffs and with open channels of communication now and discussions around fentanyl issues, even the 20% fentanyl tariff might get eliminated in due course. 

We're a small nation and open trading is extremely important to our future prospects.  I see overnight developments as very encouraging for future prospects of worldwide economic recovery and KFL provides a broad spectrum exposure to our economy recovering.  Hopefully the RBNZ will add some much needed stimulus with a 50 bps cut on 28 May.

KFLWI with a likely exercise price of $1.24 provides exceptionally good leverage and optionality around that recovery and has nearly a full year to run.  One can take a large exposure to the recovery with very small outlay so I bought even more this morning.   My modelling shows KFL NTA over $1.41 this morning so there's a 17 cent delta there to the $1.24 warrant exercise price and that's for the NZX market which is down approx 7% YTD after suffering from the effects of global trade ructions.  Even if the market just goes back to break even for the year that would add another 10 cents to KFL's asset backing and if it recovers further....that's all cream on top.

[Forrestdun]

Not comparing apples to apples when warrants exercise price includes future dividends but current NTA does not.