A warrant gives its holder the right to buy a security at a set price for a specified time.
Warrants are frequently given as a “sweetener” along with new stock issues to persuade investors to buy them.
Stock warrants are very similar to stock options but they differ in a couple of ways. Stock warrants are issued by the company whose stock the warrant is exercisable into. In contrast, an exchange-traded stock option is trade between two investors and has no connection with the underlying company. Warrant issues are granted from the company itself. The longest term for an option is typically 2 to 3 years, while warrants can have an expiration of up to 15 years.
Warrants are also traded on stock exchanges such as the Toronto Stock Exchange or the New York Stock Exchange.
Unlike common shares, warrants have built-in drawbacks that add considerable risk. These include:
No ownership rights. While stock ownership provides the holder with a share of the company, voting rights and rights to dividends (if any), warrant owners participate only in the potential benefit of the stock’s price movement.
Risk of total loss. Stocks can, and do, become worthless. But a warrant holder runs a much greater risk of losing the entire amount paid for the option in a relatively short period. This risk reflects the nature of an option as a wasting asset which becomes worthless if it expires without being exercised.
Limited room for error. Because a warrant has a fixed life, it loses some of that time value every day (that’s why it is considered a "wasting asset.").
We think you should invest directly in stocks by following TSI Network and using our three-part Successful Investor strategy:
Our new report, 10 Stocks to Buy and Hold Forever, identifies 10 stocks you can hold for the long term and shows you exactly how to profit from a portfolio that’s built to last. And it’s yours FREE!
CANADIAN PACIFIC RAILWAY LTD., $429.64, Toronto symbol CP, is our #1 Conservative Buy for 2021.
Through their shares, investors tap a company shipping freight over a 22,000-kilometre rail network between Montreal and Vancouver. It also links to hubs in the U.S. Midwest and Northeast.
In the three… Read More
A pending merger between two large oil and gas producers will create an entity capable of producing 750,000 barrels of oil equivalent per day as well as a 660,000 barrel a day refinery.
The new firm will be able to cut costs significantly and compete more… Read More
TC ENERGY INC., $54.81, Toronto symbol TRP, is our #1 Income Buy for 2020.
TC generates steady cash flow for investors mainly through a 92,600-kilometre pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. Its other operations include 4,900 kilometres of… Read More
The price for West Texas Intermediate crude oil fell to a negative $37 U.S. a barrel in April 2020 as the COVID-19 pandemic, combined with a lack of storage space, triggered a massive sell-off of oil futures contracts. Prices have since recovered to around $42… Read More
We continue to recommend you maintain some exposure to oil stocks as part of the Resources portion of your overall portfolio. The four oil producers we analyze below still have substantial reserves; they’re also doing a good job of cutting their costs. That puts them… Read More
CENOVUS ENERGY INC., $4.36, Toronto symbol CVE, remains a buy for patient investors.
The company has agreed to acquire rival oil producer Husky Energy Inc. (Toronto symbol HSE) in a friendly, all-stock takeover.
The combined firm will be Canada’s third-largest producer of oil and natural gas with… Read More
A Member of Pat McKeough’s Inner Circle recently asked for his advice on a junior mining company that holds lithium and uranium properties in Peru.
Pat feels the properties could deliver huge, low-cost production if they ever come into production. However, Pat notes that there have… Read More
The shares of CGI, Canada’s largest provider of computer outsourcing services, have dropped about 30% in the past month due to the COVID-19 outbreak. That in part reflects the pandemic’s role in limiting visits by the company’s representatives to both existing and prospective clients.
However, the… Read More
We’re promoting four stocks from our Power Growth Investor newsletter to our Successful Investor Aggressive Growth Portfolio. The move reflects their now-large market caps and their established dividend histories. That means they now warrant your consideration.
While they remain riskier than many of our TSI recommendations, these four are leaders… Read More
A: Plateau Energy Metals, $0.26, symbol PLU on the Toronto Venture Exchange (Shares outstanding: 79.5 million; Market cap: $20.7 million; www.plateauenergymetals.com), is a Canadian lithium and uranium exploration and development company working in southeastern Peru. The company was formerly known as Plateau Uranium, but changed… Read More
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
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We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
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We are continuously in the process of improving our sites and services. If any new features or policies require a change to this current policy, we will post a clear notice of this change on pages of our site where the privacy policy appears. The principle behind this privacy policy is to collect information with your knowledge and consent.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
Information You Give Us: We receive and store any information you enter on our website or give us in any other way through sign-up forms or ordering forms for publications and services. You can choose not to provide certain information, but then you might not be able to take advantage of many of our services and features. We use the information that you provide for such purposes as responding to your requests, customizing your web browsing experience for you, improving our website, and communicating with you.
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Does TSI Network Use the Information It Receives?
"Contact Us" and Comment Features: TSI Network encourages visitors to its websites to contact us with questions and comments. Email addresses and other information of persons using these features may be collected in order to facilitate our responses to those inquiries.
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Except as provided herein, TSI Network will not sell or rent personal information about you to unaffiliated third parties.
We may disclose personal information you have provided through our websites, for the above purposes, to persons or companies that we retain to carry out and other activities for which you have registered or in which you have otherwise asked to participate. In particular, we may for these purposes transfer information to any country (including the USA and other countries which may not offer the same level of data protection as Canada). We also will disclose personal information if required by law, including compliance with warrants, subpoenas or other legal processes.
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What Choices Do I Have?
Changes to this Policy
This Policy is the sole authorized statement of TSI Network's practices with respect to the collection of personal information through TSI Network's websites and the subsequent use and disclosure of such information. Any summaries of this Policy generated by third party software or otherwise (for example, in connection with the "Platform for Privacy Preferences" or "P3P") shall have no legal effect, are in no way binding upon TSI Network, shall not be relied upon in substitute for this Policy, and neither supersede nor modify this Policy.
TSI Network may revise this Policy from time to time.
Legal Notices and Disclaimers
The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
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