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TOPIC: CYTXW - Worth A Look

CYTXW - Worth A Look 14 Nov 2016 11:56 #8017

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Volume in CYTXW has picked-up dramatically today on the Orphan Drug news and is currently trading at .58 - very attractive price imo! :winky:

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CYTXW - Worth A Look 14 Nov 2016 21:50 #8024

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My thought on the volume of the warrants selling off and the stock rallying was bullish. Did we witness a sell the warrants and buy the stock strategy because of the orphan drug designation. The warrants have limited upside due to the call feature after one year and a stock price of $7.65 for 10 consecutive days. The stock has no theoretical upside limit. This strategy suggests a bet was placed for a long term stock price advance substantially more than the warrants can provide.

Is this a valid hypothesis?

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CYTXW - Worth A Look 16 Nov 2016 16:26 #8047

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DOV, CYTXW closed at .70 today, up from .58 in my earlier post on Monday.

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CYTXW - Worth A Look 17 Nov 2016 10:23 #8050

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DOV wrote: My thought on the volume of the warrants selling off and the stock rallying was bullish. Did we witness a sell the warrants and buy the stock strategy because of the orphan drug designation. The warrants have limited upside due to the call feature after one year and a stock price of $7.65 for 10 consecutive days. The stock has no theoretical upside limit. This strategy suggests a bet was placed for a long term stock price advance substantially more than the warrants can provide.

Is this a valid hypothesis?


Yes- I think this a valid hypothesis and I have been wondering why the hell they would have designed this redemption option in there.
That price $7.65- assuming still only 20-22 Mio shares or thereabouts, is still only a market cap of 150 Mio or so, so with a decent upfront of a partner in the spheres that I know Calhoun/Hedrick have been thinking about for many years- the stock price will blow past that.

There is only one party that I know, who will benefit from- or even require a redemption option- and that is Sabby.

With their share holding they are close to the 10% limit- so they cannot convert any warrants in shares. But of course- they will change tactics as soon as Hedrick et al, do not live up to their excessive bonus moneys...which is always a realistic possibility and past performance. :bang:

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CYTXW - Worth A Look 17 Nov 2016 11:07 #8051

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Fas, it's very simple as to why the redemption option was put in there - it was done to force exercise of the warrants to bring cash into the company - if CYTX has a big move over 7.65 as a result of a partnership(s), etc., the redemption feature forces the exercise and brings cash into the company way before the 2018 maturity - that feature was actually very smart and could be seen as value to a potential partner as well.

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CYTXW - Worth A Look 17 Nov 2016 11:38 #8052

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rodney.strongg wrote: Fas, it's very simple as to why the redemption option was put in there - it was done to force exercise of the warrants to bring cash into the company - if CYTX has a big move over 7.65 as a result of a partnership(s), etc., the redemption feature forces the exercise and brings cash into the company way before the 2018 maturity - that feature was actually very smart and could be seen as value to a potential partner as well.


It is the other way round Rodney. :whistle:

Cytori has the option to pay the warrant holder 7,65$ for their warrant, assuming they have the cash from a partner deal of course. :bye:

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CYTXW - Worth A Look 17 Nov 2016 11:55 #8053

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Fas, my understanding is that if the common stock trades for ten consecutive days over 7.65, then CYTX has the right to call the warrants at no value to the holder.

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CYTXW - Worth A Look 17 Nov 2016 12:00 #8054

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rodney.strongg wrote: Fas, my understanding is that if the common stock trades for ten consecutive days over 7.65, then CYTX has the right to call the warrants at no value to the holder.


I suggest you read the prospectus again and by the way- redemption means re-pay.

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CYTXW - Worth A Look 17 Nov 2016 12:11 #8055

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Fas, from the latest 10-Q:

"The warrants may be redeemed by the Company at .01 per warrant prior to their expiration if the Company's common stock closes above $7.65 for ten consecutive trading days."

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CYTXW - Worth A Look 17 Nov 2016 12:29 #8056

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rodney.strongg wrote: Fas, from the latest 10-Q:

"The warrants may be redeemed by the Company at .01 per warrant prior to their expiration if the Company's common stock closes above $7.65 for ten consecutive trading days."


Yes - the 0,01 is the "unknown factor" - I assume the closing price at the end of the 10 day period.

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CYTXW - Worth A Look 17 Nov 2016 12:32 #8057

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Fas, the .01 per share is not an unknown factor - per Tiago, it is the price that will be offered by CYTX strictly to force the exercise!

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CYTXW - Worth A Look 17 Nov 2016 12:43 #8058

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rodney.strongg wrote: Fas, the .01 per share is not an unknown factor - per Tiago, it is the price that will be offered by CYTX strictly to force the exercise!


Coming to think of it... you are most likely correct.

This makes the warrant a pretty "hot commodity" to manoeuvre with, in case- just in case, Cytori strikes a hot deal. Since obviously the PPS would be rather volatile. Anyway- I would not mind to be forced into exercising if we are above 10$, but also agree with DOV that in order to be on the safe side, the common is a lot more interesting for believers.

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CYTXW - Worth A Look 17 Nov 2016 13:51 #8059

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The warrants offer attractive leverage if you believe that the stock will move higher in the next two years - a current investment of $50, 000 in either the warrants at .70 or the common stock at 1.70 would have a much different return - using the 7.65 price as the target, the warrants would yield a gain of $277 thousand versus $175 thousand on the common.

Of course, the downside on the warrants is time, with the expiration of the warrants in Nov. 2018.

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CYTXW - Worth A Look 17 Nov 2016 15:52 #8061

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Right now $7.65 seems very far away with many potential sellers on a somewhat short road.
DOV suggested a sophisticated investors view a few days ago in warrant/common trading.
A decidedly non sophisticated view is some thought, thank goodness, volume to sell into.
One, both or none of these scenarios could be true.
What I do know to be true is our largest reporting shareholder (Sabby) was selling both warrants and common last Q.

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CYTXW - Worth A Look 17 Nov 2016 16:59 #8063

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As we all know, Sabby is a trading firm and in Q-3 they were selling the common at 2.00 - 2.25 and the warrants at .80 - .85 - not bad, but I would be willing to wager that in Q-4, they have been big buyers of the stock - we shall see in Feb.!

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CYTXW - Worth A Look 18 Nov 2016 09:59 #8064

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IMHO, Sabby will not be buying any CYTX shares unless they know that the balance sheet issue will be resolved without further equity rape financing. They have no way of knowing this legally.

WST

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CYTXW - Worth A Look 18 Nov 2016 10:11 #8065

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Maybe they have faith in Hedrick and Tiago to consummate a deal in Q-1 - no question imo that they are very likely buying this qtr. - we will see in Feb.

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CYTXW - Worth A Look 18 Nov 2016 11:19 #8066

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Yes and maybe pigs will fly!
The following user(s) said Thank You: myownhedgefund

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