Rolling over instalment warrants

[sam21poddy]

I am holding a large number of instalment warrants which are due for resetting. Unfortunately the underlying share price and hence the warrants, have plummeted. I have 3 options:

1. Let Macquarie (the issuer) sell down 50% of my warrants to keep me in the game. Result - I immediately lose 50% of my holding.
2. Pay the rollover amount to maintain the same number of instalments. Result - I have to pay $22,000 to maintain this holding - $10,000 is an immediate loss because it is interest payable upfront.
3. Pay $96,000 and buy the underlying shares and hope the share price recovers in the next few months. (These are Newscorp shares by the way).
My gut instinct is to stay cool and pay the $96,000 to take ownership of the shares and see if the share price recovers.
The problem is I will have to raid every credit card and other places to raise this money. Does anything think buying the shares in the hope that the price might recover is a foolish way to go?

 

[DTM]

Hi Sam

Personally for myself, I think its time to get out when you have to start hoping that something will go up. Its easier to cut losses and live to fight another day (or sleep at night) than to gamble all that credit.

 

[dutchie]

I agree with DTM

However, depending on your circumstances, an alternative is to buy the shares and then sell call options ( I do not recommend this) for extra cash.

 

[money tree]

why did you buy instalments?

since they were on Newscorp, Im gonna guess it wasnt for dividend optimisation, dividend stripping or tax minimisation.

which leaves leverage....

newscrap has been in a downtrend for 5 years. you are prepared to gamble everything that the trend is about to change?

GET OUT

 

[sam21poddy]

DTM
I think you are right - cut losses and live to fight another day.

Money Tree
I bought instalments because it gives you greater leverage for trading. I make more money on trades on Newscorp instalments because you can buy more with less money and they are more volatile so are a better trading share. The trouble is that I have been losing interest in shares lately and got involved in a farm hobby and I didn't watch the market for about a month - which of course I know is a fatal mistake but did it anyway. The reason I like Newscorp is because they are gradually being included in the index funds in US and so over the next few years there will be a big demand from super fund trustees over there to include them in their funds.

Thanks for your input guys.