One thing you may notice in the past 1-2 years is that share prices
generally go lower when the stock is implementing a Right Issue. The
reason is simple; no one wants to cough out money to subscribe for new
shares.
On the same logic, an expiring warrant, especially company-issued
warrants which must be converted to shares instead of cash-settled,
would suffer the same fate. It can get so bad that these warrants would
trade at a significant discount.
The last 1 month we have been seeing INARI-WB trading at a discount of less than 1%. This warrant has the following terms:
1. Exercise price: RM0.5333
2. Expiry date: Feb 17, 2020
For example, at the time of writing this post, INARI was trading at
RM1.72 and INARI-WB was trading at RM1.17. If you were to buy the
warrant and pay the exercise price of RM0.533 to own the share, you
would save 1.67 sen or about 0.97%. No matter how difficult it is to
make money in the stock market, a saving of less than 1% won't get many
retail players excited.
So, who is buying INARI-WB, and patiently & laboriously converting
them to shares? The smart money, of course. In the stock market, if you
choose to be on the side of the smart money, you will win more often
than not.
That's why INARI the share is worth watching. If it were to drift down
to the line connecting its recent trough (or, low), it is worth owning
some. Good luck!
Chart 1: INARI's daily chart as at Jan 16, 2020_3.30pm (Source: Malaysiastock.biz)
Chart 2: INARI-WB's daily chart as at Jan 16, 2020_3.30pm (Source: Malaysiastock.biz)
http://nexttrade.blogspot.com/2020/01/inari-bullish-sign.html
