October 11, 2016
The common shares of Organigram Holdings, TSXV:OGI and OGRMF have performed very well recently closing today at C$2.46, a new closing high. The shares have now gained 1,161% from the low of C$0.195 in early October 2015.
However, few investors are aware that there are stock warrants trading on Organigram (TSXV:OGI.WT) and today they closed at C$1.06, again a closing high for the year and a gain of 1414% from the low in early October 2015.
Organigram products are 100% organic with the belief that medical cannabis should be accessible to everyone. If the company can continue to execute with its growth plans the shares could possibly go substantially higher.
The question now for investors is should you buy the common shares OR the stock warrants?
Terms of the warrants
Exercise price – C$1.40
Expiry date – December 02, 2017
With today’s closing prices the warrants are now trading at what is called their ‘intrinsic value’. From this day foreword if the shares continue to rise the stock warrants will rise, penny for penny or dollar for dollar.
Let’s assume from here that the shares climb to $3, $4 or $5 (before the expiry date) we will look at how the returns on the shares and stock warrants will differ.
Common shares C$3.00 C$4.00 C$5.00
Gain from today’s price of C$2.46 21% 62% 103%
Stock warrants from today’s price of C$1.06 183% 277% 371% (Holy moly)
Leverage of warrants over shares 8.71 4.46 3.60
Leverage indicates the stock warrants will out perform, for example, 8.71 times better than the shares.
The stock warrants are definitely the place to be for the greater gains with the caveat that like stock options, stock warrants can expire worthless.
Every investor is encouraged to make their own decisions and/or consult with their financial advisors before entering into any transactions. Our analysis above is meant for educational purposes showing the incredible gains that can be make with stock warrants.