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Wednesday, March 01, 2006

Yet Another Strathmore Press Release

Strathmore Minerals (website)
This press release announces that warrant-holders exercised their warrants at $1.75 immediately before they increased in price to $2.00.
C$7,514,815 was raised from the recent exercise of 4,294,180 warrants at a price of $1.75 per warrant.
When we go back and look at the 10-K issued May 3, 2005, we see a subsequent event whereby Strathmore issued 10 million units at $1.50 per unit. Each unit consists of one share of common and half a warrant. Each whole warrant can be exercised at $1.75 until Feb 21, 2006 when the price goes up to $2.00 and it expires on Feb 21, 2007. An extra 1.027 million options went to the agent who brokered the deal. The stock price at that time was around $1.75, the life of the options are fairly short, so this isn't so horrible.

So there were about 6 million of these funky warrants outstanding and about 72% of them were exercised at $1.75 before the price went up. Strathmore claims that this is a vote of confidence from warrant holders. Maybe, maybe not. One way to find out is to see if the stock price took a nosedive sometime around Feb 21. If so, then it's a vote of no-confidence. They exercised the warrants and dumped the stock. I know if I held the warrants and intended to dump the stock, I'd do it several days before the deadline when others might do it. This would explain the drop around Valentine's Day.

I, myself, had already accounted for these warrants as pure dilution. If I had wanted to be precise, then I would have considered the strike price, but unless there's a ridiculous number of warrants and some reason to be seriously looking at a company like that, I'll generally assume a strike price of zero. So from my own form of rough accounting, this is all gravy.

In other news, this insanely needy cat is bugging the hell out of me. Cats are supposed to be aloof and independent, not obsessively needy. I'm trying to type yo[; stupi9l. ca

Is that really a picture of your cat? It's cute, so I hope so.

Congrats on the jester hat by the way.
No, it's the Daily Kitten photo for that day. They put up a new kitten photo every day at 10:07 AM Eastern Time. It would be difficult to get angry with a kitten like that.

The story about the hat is funny. I forget why, but Motley Fool sent me some sort of blue bag several years ago as a random gift. So I put the bag on my head and took a photo of myself holding a sign saying, "Thanks for the really great hat". I cropped out the sign for this version of the photo.

So I'm debating whether I'm going to pick apart the Berkshire Hathaway annual report this weekend. There are all sorts of pros and cons. The main drawback is that it takes away from my real investing work which I haven't been doing for the last few days. The scripts are done, I started with a few companies and then got sidetracked. I'd hate to put it off even more. But then the Berkshire report is a fairly big deal. I'll see what I feel like doing.
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