I bought October 2025 $11.50 Sky Harbour warrants (SKYH) for about $0.75. I was anticipating selling the warrants in due course and with redemption date 3.5 years away, I wasn’t paying a great deal of attention
Travis’s mention of warrants in yesterday’s article prompted me to look more closely at my SKYH holding and I don’t get what’s going on.
SKY is currently around $24.50 – about $13.00 above the strike on the warrant, yet the warrant is trading at about $1.20, not $13.00 plus.
I trade with Interactive Brokers and the redemption of the warrants seems as easy as pressing a button – resulting in me buying SKY at $11.50, which I could then sell immediately for $24.50? I bought 1000 warrants so selling the warrants would result result in $400 profit. Redeeming warrants and selling stock would result in about $12,250 profit ($24,500 – $11,500 – $750 (cost of warrants). I must be missing something. Any clarity would be greatly appreciated. Thanks, Greg
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Greg,
Travis did a good discussion of this in the first set of comments of the Friday File, 3/4/22.
It includes:
‘It might be that the shares that underly the warrants are not registered yet, which would mean the warrants can’t be exercised yet…’
Presumably either the warrants cannot yet be exercised (usually because the underlying shares are not yet registered with the SEC), or there’s something else going on. This is an odd situation, because the stock is extremely illiquid and the 90% or so of YSAC shareholders who redeemed their shares instead of holding on to own SKYH means that probably much less than 10% of the A shares can be freely traded (The SKYH owners own the B shares, which aren’t publicly traded, and Boston Omaha owns the rest of the A shares — and they’re a ~25% holder and are presumably locked up even if they wanted to sell). I haven’t seen an early redemption notice for SKYH warrants, but that’s a risk as well.
If Interactive Brokers will let you exercise the warrants today, that’s the no brainer move — but it’s so much of a no brainer that it seems unlikely to be that simple. I’ll check with my brokers and see what they say.
See link below on SKYH+ warrants. The prospectus seemed to say we could trade .36 warrants per class A share. Did I understand that correctly? Or, would you buy it at the current price of $10.50. Appreciate any additional advice given the information below. Thanks!
https://www.businesswire.com/news/home/20220328005854/en/SKY-HARBOUR-GROUP-CORPORATION-Announces-Filing-of-2021-Annual-Report-on-Form-10-K-2021-Audited-Financial-Statements-for-Its-Operating-Subsidiary-in-Form-8-KA-and-Form-S-1-for-Issuance-of-Shares-Underlying-Its-Warrants-and-Resale-of-Private-Warrants
Travis, thanks for the comment, and to Tim for his earlier reference to your note – which I had missed. While I don’t know what’s going on with these warrants, I have been reluctant to take an action that seems too good to be true – because usually it is. Today appears to the the 7th trading day SKYH has been above $18. Any further input would be great and appreciated
I spoke with the trade desk at my broker and they told me that they have not yet officially received the terms for the SKYH warrants (shown as SKYH+ at my broker, as opposed to SKYHWS and other variations) and that they cannot be exercised until the terms have officially been received.
They had no indication or timing on when terms would be received and could not give any ETA on when they might be exercisable. Based on this, I personally will treat them as a speculation. It seems like a decent speculation (IMO), but it is definitely not a sure thing.
I did decide to buy some and I cannot complain about the gains so far.
Thanks mgsoloway. I connected with my broker and received the same answer. I was mistaken regarding the ease of IB’s redemption process. Rather than simply “clicking” exercise, a specific request needs to be made – and then they tell you that the warrants aren’t yet available for redemption. As you say, while the percent return on the warrants is currently good, I bought them on speculation and am willing to hold them and see what the return – redemption or selling of warrants – is like when redemption is possible. Thanks for the responses.
Greg, did you get any comments on your question? Still have the SKYH warrants? Now that the stock trades below/around $10 per share? I am curious because your comments showed up on Google when I was searching SKY HARBOR WARRANTS. I had recently sold the stock and now see 500 warrants in my account. Still trying to figure out what happened. And now try to figure out what to do with them. Thank you! Bruce
My apologies for posting. I was not seeing all the comments at 1st and now, upon looking further… I can see all the comments. My Bad!