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...
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.
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.
Quote from: Basil on Mar 14, 2025, 03:01 PMSadly, 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.
Quote from: mike2023 on Mar 15, 2025, 09:17 PMDid 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.
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.
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
Quote from: winner (n) on Apr 28, 2025, 10:28 AMReduced 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.
Quote from: Ferg on Apr 28, 2025, 11:37 AMI 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
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.
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.
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.
Added more warrants today. Too cheap and a whole year to run gives great optionality on a recovery in the NZX.
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.
Not comparing apples to apples when warrants exercise price includes future dividends but current NTA does not.
Hey Basil ..., gpget your abacus to a Black Scholes value
Be heaps more than 5 cents I reckon
Market was down 7% YTD, pretty safe assumption it recovers that and a bit more and that covers the 8% in dividends over the next year. The bull case: If the market goes up 20% from here (net 12% after dividends paid) NTA would be $1.41 X 1.12 = ~$1.58 and exercise price is $1.24 giving a difference of 34 cents.
I agree 100% Winner, see below.
The well regarded Black and Shoals option pricing model is here. https://goodcalculators.com/black-scholes-calculator/
I entered the following variables, (which disregard the current ~ 7% discount to NTA) and treat the current share price as $1.32 as fair spot price for KFL
Current spot price $1.32
Strike Price $1.24
Term 1 year
Standard 15% volatility
4% risk free rate
8% dividend yield
Fair value is 8.64 cents per warrant. Any view you have on the future closing of the current 7% discount KFL trades at to NAV, adds to that value.
Using estimated NAV of $1.415 as the current spot price raises the value to 14.57 cps.
If NTA gets to $1.58 Basil exercise price lower than $1.24?
Yes, thank you for highlighting that very good point Winner. I assumed 8% divvies x an average $1.37 NAV = ~ 11 cents comes off the face value exercise price of $1.35 = $1.24. If NAV averages $1.50 over the course of the year, 12 cents ($1.50 x 8%) would come off and the exercise price would be $1.23. Exercise price gets rounded up or down to the nearest cent so even $1.45 NAV average, ($1.45 x 8% = 11.6 cents), and we are not far off $1.45 already, would see an exercise price of only $1.23.
Closing NAV today I make $1.421 by my valuation model. Barramundi shareholders will also be relived to know that my estimate of NAV it's almost back to 70 cents @ 69.9 cps.
Plenty of room to run, NAV started the year at $1.48 so there's a real chance that after a recovery of the NZX the exercise price of the warrants will only be $1.23.
Quote from: Basil on May 13, 2025, 12:44 PMCurrent spot price $1.32
Strike Price $1.24
Term 1 year
Standard 15% volatility
4% risk free rate
8% dividend yield
Fair value is 8.64 cents per warrant.
Interestingly, if you change those variables a bit, current share price $1.33, strike price of $1.23 that I have been talking about, Volatility 18% (what it ended at today on the US markets) and other factors remaining the same
gives fair value of 11.13 cents.
Good post on the other channel. I agree 100%. If you can get them at a decent discount to NAV, you boost your income considerably as the 2% quarterly tax free divvies are paid out based on the NAV, not the share price.
QuoteThe only con is convenience.
1. Yes you could mimic the portfolio as its all fluid companies and they dont trade all that often and save the management fees. BUT you would pay more tax on divvies if you are a 33/39% tax payer - for KFL this is more significant than BRM as divvies make up more of the gain. This offsets some of the fees
2. Various quoted figures for the gross equivalent didvidend do overstate it a bit as the portion that is capital gain would not be taxed anyway (ATM!)
3. KFL is very liquid - it is easy to take the divvies as DRM and then cash-up a few shares each month/quarter/year to provide you with a regular income.
4. warrants provide a small benefit for holders (but probably not worth much) - but they are nice for a hedge or useful to get a big position at a fixed known price
5. For those of us without the time/discipline to trade properly they are a good option - KFL have generally avoided most of the boom and bust NZ stocks over the past 20+ years.
6. KFL outperforms any NZ ETF over its lifetime
As Alokdhir and others (Mr B included) have said - these are an attractive stock in retirement:
1. Good track record
2. Regular income
3. As diversified as a NZ only fund can get (with big holdings of FPH/IFT/MFT/EBO they have good exposure to Aus/International economies)
Only advice I would add is to only buy them with >5% discount to nta.........
Presentation from annual meeting today. I couldn't be bothered fighting the heavy Auckland traffic in the wet and wild wintry conditions to attend the KFL meeting this morning. https://api.nzx.com/public/announcement/456481/attachment/449056/456481-449056.pdf
Quote from: Basil on Aug 08, 2025, 11:29 AMPresentation from annual meeting today. I couldn't be bothered fighting the heavy Auckland traffic in the wet and wild wintry conditions to attend the KFL meeting this morning. https://api.nzx.com/public/announcement/456481/attachment/449056/456481-449056.pdf
Matt will miss having a chat with you
You better ring him and talk him into Turners
Quote from: winner (n) on Aug 08, 2025, 11:44 AMMatt will miss having a chat with you
You better ring him and talk him into Turners
LOL, I tried that last year when they were $4. I tried to get motivated this morning but in the end the filthy weather got the better of me.
Now EBO has become a market pariah time to dump them I reckon - like do what they did with Ryman and sell the lot
Might get $25m for them
Bit of a worry is Peek's recent history is what would he do with the proceeds - doesn't seem keen on the likes of HLG or Turners.
Probably double up on Vulcan Steel and try to resurrect the situation there.