Replies to post #2024 on WONDERFUL WORLD OF WARRANTS

[jtomm]

Yep, I'd say that's a fair way to look at it. Things are going well and will hopefully continue. But LMB certainly turned around in a crazy way at the last minute. They seemed like a lock for their next earnings report at the time, and I still can't figure out what happened there.

And now, with an administration that has made totally insane decisions to get us into this energy crisis, it's quite possible the govt will make further knucklehead moves. Stress and excitement; anything's possible.

Heck, the company could get bought out tomorrow for $45 per share, and the buyer agrees to buy out the warrant holders too at $3 per warrant. It's possible. I don't think any of us would have a problem with that! We'd have party hats all around!

Or we might wake up tomorrow and the govt has declared under some emergency power that no business in the country can charge more than $3.75 a gallon for gasoline and natural gas price is now fixed at $5 or $6, and all sorts of unintended consequences break loose within the energy industry and the economy

The govt had no right to lock people in their homes shut down small businesses and bankrupt them. But they did it. If you look at what we've just lived thru, I would have told you that was impossible.

[brandemarcus]

I am late to this interesting exchange, because I didn't see it.
Just a few points in response to days of posts:

1. I am not worried about Carl Icahn caring about the warrants exist. His whole position is a fraction of his net worth. Icahn wants to be seen as pro shareholder. If sd lags the move in other oil companies, it weakens his case as a shareholder advocate.

2. I think the Warren profit tax(as proposed in our country) targets larger oil companies than Sandridge. This is ironic , since Sandridge has a lower price earnings ratio adjusted for cash and debt then any other peer oil company I can find.

3. We are long way from demand destruction for both oil and natural gas. Short term oil demand is highly inelastic. On a btu basis oil is almost as cheap as coal and is much cheaper than World Natural Gas. Domestic Natural Gas is cheaper than anywhere else so Plastics , Fertilizer will be produced more in the US.

4. I am worried about management incentive to keep the warrants from being in the money. I think that could be the reason for them to not clarify what they are going to do with the cash. That maybe the reason the 35 October calls which expire October 21 are bid at 2 , while the warrants which expire October 4 at 41.3 are only bid at 10 cents. ( Is there an arbitrage opportunity?).


5. I think management is being pennywise and pound foolish if that (#4) is their thinking. Adjusting for cash and no debt sd is the cheapest company in terms of forward price earnings. They might get a hostile bid soon if they continue to sit on the cash.


6. I encourage everyone to check Josh Young's material on Sandridge. For macro views read the Gorozen Blog and Horizon Kinetics. These sources have been right about calling this market from back in 2020 , when not many were bullish. They are
smarter than me, so why not read them instead of my attempt at poorly paraphrasing their points.