no problem i'll explain.
first you need to understand why I think the stock will be above $10 in less than 12 months.
1. Foreclosures are inevitable in many situations. When Freddie Mac and Fannie Mae set up a system to put people into homes, even homes that they couldn't afford --- the private sector was mostly forced to generate various methods of financing them. What's funny is that we ended up selling a lot of these bad loans abroad. Yet, foreigners, as much as we've screwed them by selling them these bad assets still buy US Treasuries at prices that will be beat by inflation... and likely by a wide margin. Do note that the FED is the largest purchaser of US Treasuries. Kind of a smoke and mirrors game. Anyway, the bottom line is that in a situation where people are living in homes that they can't afford and they're losing their jobs --- various government programs can only push forward with "Kick-The-Can-A-Little-Into-The-Future" programs for so long before they are forced to change their habits. There is a huge glut of foreclosures that need to be processed and have been stuck in the system for a while now. This is not sustainable. Thus, at some point in the future we will face the light.
2. DJSP was guiding for $1.84 or so in 2010 --- before their largest client began reworking their system and government programs kicked in, which lowered guidance to $1.35 or something, and now they've removed guidance because they have reasonably and rationally decided that at this point in time, offering guidance doesn't make sense. It's my belief that when this whole mystery rips open, the projection of $1.84 will come back front and center, it's just that "investors" aren't willing to wait a few months for it to happen.
3. So, why DJSPW instead of DJSP? Here are my calculations. Note that in Margin accounts, the leverage ratio is around 0.3
You have $1000
DJSPW is at $0.90
DJSP is at $3.80
You can buy roughly 1111 shares of DJSPW or 877 Shares (On Margin) of DJSP.
The cost for the warrants is $1000, and for the stock $3333.
If/When DJSP goes to $10, my model puts warrants at $5.50 and the stock at $10.
Your 1111 warrants are worth $6111, and your 877 shares of stock are worth $8771.
Subtract the cost of $1000 for the warrants and $3333 for the stock and your profit on the warrants is $5111 and on the stock $5438 --- which is for the most part the same.
This is how you make 400% on a stock going up 100%. In retirement accounts, you cannot margin, and thus DJSPW is the best way to go.
At this point, I don't think I can explain that in any better detail.
Those who're making an effort to fail to understand me, are not a concern of mine. - John Galt, Atlas Shrugged, Ayn Rand
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