BRM - New Warrant Issue for Barramundi

[Basil]

Jeepers after the chat yesterday up 23% 

OK OK that is only 0.4c....

Probably more to do with the ~ 1 cent increase in underlying NAV so far today.  Just updated the NAV with latest prices off the ASX and its 80.02 cps by my calculations.  Woohoo !!
Opportunity definitely knocks with the warrants at circa 2 cents and effective entry price to BRM of only ~ 65 cents.  I bought some more this morning to make up to a nice round number with a LOT of zero's lol

I expect the Australian central bank will start easing monetary policy aggressively in 2025 giving strong tailwinds to the ASX.  2025 should be a great year for the Barramundi portfolio.

[Dolcile]

Interesting, even around the 2.5c mark looks like a reasonable entry.  Just got to hope that the NAV and SP eventually closes.

[moose]

The dilution could be upto 3.5c/share (depending on how many warrants are exercised) so any short-term gain is likely to be very small (1-2c/warrant exercised).
But this is not the only reason to buy warrants......exercising them has 2 other benefits over buying the head shares:
1. no commission (BRM actually pay this to brokers when required (e.g. for ASB/FB/Sharesies) so essentially comes out of the nta (but a small amount overall - say 0.5% including other costs of the company having warrants)
2. BRM is relatively illiquid - warrants are a good way of getting a sizeable block without moving the underlying head share price - imagine trying to buy 1M BRM on market - would probably cause a 5c+ price increase.

It will be really interesting to see what happens to BRM price in the few days after exercise this time - could well take a dip as people rebalance (sell) shares after getting new ones - its been a while since any of the FF Triad have had a successful warrant issue (i.e. with the majority of warrants exercised), but if it does dip the big gap between share price and nta should see them bounce back (even with a 3c+ drop in nta post exercise).

[Basil]

I'm working on the assumption that somewhere around half of the warrants will get exercised.  Seeing as we don't have any reliable way of estimating how many might get exercised if we assume half and that the NAV is 80 cps at the time before exercise, the math's on a one for four warrant exercise where half are exercised works thus.

80 cents per share nav + 1:4 issue where half exercised = 1:8 at 63 cents = 63/8 = 7.875 additional NAV, total NAV for 1.125 shares = 87.875 cents, therefore NTA for 1 share post exercise = 78.11 cps.  I don't know for sure, but I think most people exercise them using the online portal Barramundi provide and then direct credit the funds.  Sure, there is probably a minor amount of brokerage paid for some people who need their broker to hold their hand to fill out a simple online form.

Assuming the above is somewhere around where it works out those buying the warrants today at 2.5 cps are paying 65.5 cps for 78.11 cps of assets = 16.15% discount to NAV.  That's the highest the discount has been in many years.  I expect it will revert to a normal level of discount of circa 6% over a period of a few months after the warrant exercise. 

[snapiti]

I did a bit of research on warrant conversion % compared to SP........I think this time we are going to see an 80% plus conversion rate

[Basil]

I did a bit of research on warrant conversion % compared to SP........I think this time we are going to see an 80% plus conversion rate

When was the last time it was that high ?
I think you and I between us are going to affect the result a bit lol
Did you snap up any more today Snapper ?
I got my snout into 100K more at 2 cents at the open.  Couldn't stop myself being in for an even bigger feed.

[Dolcile]

Just wondering, how can I confirm the warrant exercise price?

EDIT.  Is it just the 69c minus 4xdividends since issue date?

[Basil]

Yes that is it and the exercise price has been confirmed at 63 cents, see recent company announcement

Nice to see NAV confirmed today at 80.3 cents and plenty more green on my BRM watch list screen today.  Happy days.

[snapiti]

https://barramundi.co.nz/investor-centre/capital-management-strategies/

link to previous warrant uptakes, last time there was a huge gap between exercise price and NAV they had a 90% plus uptake

[Basil]

Thanks Snapper, perhaps you are right and warrant uptake will be well north of 50%, certainly, I am sure you and I are both exercising our warrants so that will affect the percentage a bit lol

Updated NTA as at close of ASX yesterday I estimate at 80.44 cps.

I still think no matter the slightly higher dilution, this is an outstanding opportunity.  Based on the average discount BRM and others in the fisher funds group have traded at over the last year I think there's a high quality and substantial free lunch on the table, not unlike going to the annual meeting lol...expect with this free lunch you'll be able to dine out for a lot longer  😊

[thedabsman]

I'll be exercising all my warrants both free and a few purchased. I'd expect about 80% or more taken up. Totally agree this discount to NTA is short lived especially considering the Aussie economy will grow faster than us and also interest rates here dropping quickly in the next 12 months. Fill your boots for sure. Dont mind the discount around for a few DRP cycles thou...

[Minimoke]

As at today count me in for someone else who wil be exercising my warrants. But I'm not burning my cash until a bit closer to due day. Just in case.

[Dolcile]

Does anyone know if you can exercises the warrants via Sharesies?

[Minimoke]

Does anyone know if you can exercises the warrants via Sharesies?

Why wouldn't just go here and hand over your loot. Do you have a CSN?
https://www.warrants.co.nz/barramundi

[Basil]

Latest estimated NTA as at close of trading on the ASX today 80.38 cps