Today I’ll try to keep my blather a little more limited than usual… I have one update on a stock that I bought recently, and a couple updates on our watchlist this week (that list always lingers down there at the bottom of the Real Money Portfolio, in case you’ve missed it).
The update is that the Social Capital Hedosophia units (IPOAU) have commenced separate trading, and, upon request through your broker, can be divided — the warrants and shares are now also publicly traded. This gives us a little benchmark on what other folks are paying for this SPAC — and it reinforces what I was thinking when I bought the shares, that the warrants would probably be trading at about $1.50 per share once investors could trade them.
I haven’t split out the units in my Real Money Portfolio into shares (IPOA) and warrants (IPOA-WT, or some similar ticker depending on your broker’s preferences… I’ve also seen IPOA/WS), because I haven’t split my units in my brokerage account yet, but there has been some trading in both shares and warrants — the shares without warrants traded today at about $10.10, and the warrants traded at about $1.68. Each unit gets a third of a warrant, so that would mean the unit today should be worth $10.66 ($10.10 for the stock, plus 56 cents for ta third of a warrant). They closed the week at $10.55, so that’s close enough… and buying below $10.50 did indeed make sense.
If you’re at all inclined to trade in and out of these shares in the time while we wait until the SPAC makes an acquisition, now would be a good time to tell your broker that you want to separate your units so you can trade them — they’ll likely be worth a few pennies more as separately-traded investments (stock and warrants) than they will as IPOAU units, particularly if the warrants rise in price. I’m not in a rush to trade in or out and plan to wait for whatever their business combination might be, so I haven’t bothered to ask for separate trading yet.
Going forward, buying the shares at $10 or below still makes sense to me, and the units up to around $10.50… though betting on the warrants is, of course, far more speculative since they don’t end up being worth anything if ...