Selling a Banker, Buying a Warrant


Just a quick note to confirm that yes, I did sell my remaining shares of Sprott Resource Lending once my trading restriction ended — and early today I bought some of the PNC Warrants that I had mentioned in our last “Idea of the Month” piece.

PNC Shares are at post-crisis highs now, fairly close to all-time highs, but the stock is valued much more cheaply than it was before the financial crisis and they seem to me to have solid earnings power and a good asset base for the long term — the warrants are essentially a bet that the stock will rise more than 15% from here over the next five years, which seems like a very decent bet to me. You can see my piece on those warrants here if you’re interested — the strike price is around $67 and the shares are at about $70 now, so the warrants have an “in the money” value of $3 and a “time value” of about $10 at recent prices near $13, buying at this price effectively means I need PNC to reach $80 before November, 2018 to break even. My initial purchase order has not filled entirely (these warrants are all quite illiquid), so I do still have a small limit buy order sitting out there which may trigger at some point over the next few days.

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