Small Sandstorm Swap

By Travis Johnson, Stock Gumshoe, June 30, 2011

Just a note to let you know that I’ve moved about a third of my Sandstorm Gold (SSL in canada, SNDXF on the pinks) common shares into a SSL.WT/SNXXF warrant position (ie, sold the shares and bought the warrants — the original warrants, not the Series A) — with the warrants trading exactly at the money (they have an exercise price of 60 cents, and currently trade at about 62 cents, which combined pretty much equals the current Sandstorm Gold share price of $1.22 — all of that, including the exercise price, is in US$) it’s like a very long term LEAP option with no implied time value, and given my belief that Sandstorm will be substantially higher in three years when these warrants expire, it seems advantageous to get the leverage of the warrants in my back pocket as long as I’m not being charged for the privilege.

This is not necessarily a “no brainer,” to be clear — if Sandstorm drops by 15%, the warrants are likely to drop by at least 30%, so if you think the recent climb will wither now that the newsletters aren’t actively promoting the shares any more it may not be the best bet, particularly for those who are short-term oriented. But this way I get to have basically the same exposure to Sandstorm shares without committing as much capital to the position. I now hold more warrants than shares, and the value of my holdings is split about 60/40 warrants/shares. Sandstorm Gold remains my largest personal holding.

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