Queries How to read stock tables and warrants

We just received our first issue of The Northern Miner and enjoy it very much.

As president of an investment club here in Tokyo, I would like to have some information on how to read your stock tables. We find dollar figures but are unsure of the number figures only. Do they represent Canadian pennies?

We also need to know how to read the warrants section. We find the price per share but sometimes the price for a warrant does not make much sense in relation to the actual list price of the share. Do these warrants sell at a big discount to the market price of the share?

Any help would be appreciated. A. T., Tokyo, Japan

Stock tables can be read, from left to right, this way:

— The first column is the company’s name or an abbreviation that can be easily identified.

— The second column is the number of shares traded during the week ended as of the date at the top of the page in reverse type.

— The next four columns give price information in this order: the highest price paid during the week, the lowest price paid during the week, the price of the last trade during the week and the change. If there has been no trading activity in the stock during the week, these four columns will show a bid price and an ask price. Generally, prices in this column are in Canadian pennies except for those prices that have traded at $5 or greater. In any case, any prices that are quoted in dollars and fractions thereof instead of pennies are preceded by a dollar sign ($).

— The last two columns show the highest price and the lowest price at which the stock has traded during the past 12 months.

The Alberta Stock Exchange listings are slightly different in that they do not include the 12-month high and low prices. The COATS listings are quotations for stocks that are not listed on a Canadian stock exchange and give only the volume for the week and the highest and lowest price for a transaction during the week, or the bid and ask price.

— The warrants may be difficult to read due to the abbreviations required to minimize the space they take in the paper. Generally, warrants cost much less than the underlying share, but this is because the warrant only gives the holder the right to buy the underlying share at a specified price for pre-determined length of time. For instance, in our Aug 22, 1988 issue we published this information about Adastral Resources’ warrants:

Adastral Res. — 2 A wts buy sh @ 55 cents to Sept 21/88.

That means that if you own two of Adastral Resources’ `A’ warrants, you have the right to buy one common share of Adastral at 55 cents until Sept 21, 1988.

Our stock tables for that week, however, show that Adastral common shares last traded that week at 32 cents while the warrants didn’t trade but were bid and asked at 5 cents . Therefore, it’s cheaper to buy the Adastral common stock on the open market rather than buy two warrants and exercise them. The Adastral warrants are still available on the market at 5 cents (although n one traded that week) because, presumably, someone may believe that Adastral common shares will trade higher than 65 cents before September 21. If they do, that person would make a profit because he would have had to have bought two warrants at 5 cents each and exercised them at 55 cents to obtain a common share for a total price of 65 cents regardless of how high the common share was trading.

Because of these factors, when looking at warrants it is important to look at the exercise price and the expiry date as well as the price of the warrant and the price of the underlying stock and the number of warrants needed to buy each common share.

Keep in mind, too, that there are many “wrinkles” in warrants; some warrants can be exercised to buy a commodity such as gold or zinc rather than an underlying equity, some have more than one expiry date and prices that coincide with each expiry date.

Warrants can be very profitable, but they are usually much more volatile than the underlying equity and they can — and frequently do — expire worthless.