Starburst's warrants deserve another look
MOST of the time, warrants will move in tandem to their underlying shares. However today's feature, Starburst Holdings' warrants, on Friday fell when the stock rose. So even though we've featured Starburst's warrants in this column before, this movement suggests the instrument warrants a look.
Starburst's shares on Friday inched up by S$0.005 to S$0.44 but the warrants dropped S$0.019 or almost 10 per cent to S$0.173 on low volume of 40,000. Granted, illiquid trading can sometimes result in price distortions but this in turn does indicate a window of opportunity for traders to exploit.
The warrant bears an exercise price of S$0.25, so it is "in-the-money" by S$0.19 (share price of S$0.44 minus exercise price). Since the warrant costs S$0.173, there is actually a small conversion discount of S$0.017 or 3.9 per cent relative to the share price. Given that gearing is average at 2.54 and expiry is a long way off in June 2021, these numbers certainly make the warrant interesting.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Companies & Markets
US bill to restrict WuXi AppTec, Chinese biotechs revised to give more time to cut ties
Barclays cuts jobs in energy transition team it only just built
UMS Holdings Q1 net profit drops 44% to S$9.8 million
SIA Engineering H2 profit rises 11.5% to S$37.8 million on robust aviation MRO demand
Great Eastern shares jump 39% as OCBC mounts S$1.4 billion privatisation bid at S$25.60 per share
US: Wall St opens higher, focus on comments from Fed officials