AI
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| Alias Born | 06/08/2009 |
Tuesday, October 27, 2009 7:39:47 AM
Why reverse mergers have cheap warrants 
http://www.wsw.com/webcast/roth22/idi/
Interesting: Hedge funds buy a Unit which comprises of a share and a warrant. They sell the warrant and then vote No at the merger. It's an arbritration since they get their money back and they get to sell the warrant for profit.
Hence warrants get cheap
Shares that vote no get their money back! This affects how much cash the entity has - more people who vote no means less cash in business - this is the case for IDI but it seems to be the general case.
Example:
Hedge fund buys unit for $8.
Sell Warrant for $1.
Keep Share.
Vote No and get $8 back for share.
Bunch of parasites
Now, all I need to know how many vote against... hmmmm how do I find that out?
rich
http://www.wsw.com/webcast/roth22/idi/
Interesting: Hedge funds buy a Unit which comprises of a share and a warrant. They sell the warrant and then vote No at the merger. It's an arbritration since they get their money back and they get to sell the warrant for profit.
Hence warrants get cheap
Shares that vote no get their money back! This affects how much cash the entity has - more people who vote no means less cash in business - this is the case for IDI but it seems to be the general case.
Example:
Hedge fund buys unit for $8.
Sell Warrant for $1.
Keep Share.
Vote No and get $8 back for share.
Bunch of parasites
Now, all I need to know how many vote against... hmmmm how do I find that out?
rich
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