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.

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