Thursday, April 1, 2010

Saizen REIT Warrants Purchase

I didn't think I was going to update my portfolio so fast...

I loaded 60 lots of Saizen REIT Warrants at 0.075 today. The expiry date is in 2012, but I may convert earlier than that.

The reason for buying warrants is because
1) It's cheap, and I have the option to convert or sell for capital gain as I deem it fit. And when I convert the warrants I have, it would represent an additional 351 JPY Mil for the management to play with, perhaps... help a little in the YK Shintoku loan...

2) Conversion price is at 0.09, which works out to 0.165 for mother share. It's a warrant without time value? Probably because the volume is too low.

3) I can buy immediately from the sell queue without queuing or waiting for 0.165 to come! I'm afraid of hitting only 1 or 2 lots and still need to pay the expensive brokerage.

In addition, Credit Suisse has become a substantial shareholder of Saizen, crossing 5% in holdings. Maybe I should feel safe that a big bank is buying into the same stock as me?

I look forward to the next financial statement by Saizen to see if there are any more updates on the YK Shintoku CMBS loan.


  1. Bank may buy for different reasons and not necessary as long term investment

  2. Hi JW,

    Congratulations. It was a masterstroke, for sure. :)

  3. Hi CW8888,

    that's true as well. But at least for the mid term, I will be on the same side as them :)

    Hi AK71,

    thanks. Whether it will be a masterstroke remains to be seen. I will definitely try to accumulate the mother share next. Your holdings have given me more confidence!

  4. Hi JW,
    If i am not wrong, Saizen REIT did not issue any dividends last year and only issued rights. Any views on this?

    And dont you think holding warrants seem kind of risky since you wont be entitled to rights/dividends? (or maybe you will be entitled?)

  5. Hi Hyruga,

    Saizen indeed did not issue any dividends last year because the net income were all used to repay the CMBS loans, of which most have been repaid.

    Holding warrants are ok as I have the flexibility and choice to convert them whenever I want to. It is just an option for me to purchase... i.e. I lock in Saizen at the current price of 0.165.

    Warrants will not be entitled to any more rights (I doubt there will be anymore) or dividends... But I will make very sure I convert the warrants into mother shares before that happens. I'm more of waiting to see the next financial report before exercising my warrants (early) or buying more mother shares.

  6. I realized that it may be a good way to leverage as I will have a fixed deposit maturing in a years time . Also it will be a safe move as if the company will to foreclose, only the price of the warrant rather than the foreclose price will be lost

    Disadvantages will be we need to exercise the stock before execution date and not entitled to dividends.

    However I have yet to check on the commission payable to broker on
    buying the warrant
    exercising the warrant

    Cheers Chan

  7. Hi chan,

    thanks for dropping by. The commission payable to the broker is the same as when you buy any stock or equity.

    As for exercising the warrant, I think it's sending a cashier order together with a letter of exercising the warrant to the company in charge of the warrants. For the cashier order, the charge should be about $10.

  8. AC88, you are welcomed :)


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