Shaving a Warrant Position

By Travis Johnson, Stock Gumshoe, October 15, 2013

Last time I wrote about my warrant holdings in both PNC Financial and Boston Private Financial, back in August, I said that the prices are eminently justifiable and there’s still a large potential upside … but that after a solid runup in the prices I would be more likely to sell some of my holdings rather than buy for personal portfolio reasons (both had grown to be large holdings, and while I like the leverage of warrants I don’t want them driving my portfolio — they’re too volatile and have too much of a chance of going to zero).

So … I still like both warrants, but I’ve sold a third of my Boston Private Financial Holdings warrants (BPFHW), which I consider and have always considered to be the riskier of the two TARP warrants I own and have written about. It’s still a reasonable price — you effectively pay $4.75 or so right now for the right to buy the stock at $8, and the stock is around $11.50, so it takes only a few percentage points of gain each year between now and 2018 expiration to make them worthwhile, but the underlying company (BPFH) is a small asset manager and private bank, is a volatile stock, and isn’t definitively cheap, so I want to take some profits. I’ll let the other 2/3 of my holding ride for a while and see how the company is doing, and I have no particular intention of selling my PNC Warrants (PNC-WT) right now.


Are you getting our free Daily Update "reveal" emails?
If not, just click here...

(function () { var e = document.createElement('script'); e.type = 'text/javascript'; e.async = true; e.src = ('https:' == document.location.protocol ? 'https' : 'http') + '://btn.createsend1.com/js/sb.min.js?v=3'; e.className = 'createsend-script'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(e, s); })(); (adsbygoogle = window.adsbygoogle || []).push({});

Sign Up for a Premium Membership

To view the rest of this article (and to have full access to the rest of our articles), sign up.
Already a member, log in.

Become a member