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What is a Warrant?
A warrant is a medium to long-term option listed over a share and traded on the Johannesburg Stock Exchange.
Buyers of warrants are buying the right to buy or sell the underlying share at a specific price at some future date.
This is best illustrated by way of an example.
Deutsche Bank listed a call warrant on the ordinary shares of
Gold Fields Limited. Investors who buy Gold Fields warrants are
not buying the Gold Fields share and therefore do not receive Gold
Fields dividends. Instead they have acquired the right to buy Gold
Fields shares at a price of R50.00 at any point in time between
now and 15 June 2000. This means that in the event that the Gold
Fields share rises to a price of R75.00 before 15 June 2000, a
warrant investor can present his warrant to Deutsche Bank and
exercise his rights in terms of the warrant. The attraction of
buying a share that is worth R75.00 for R50.00 is obvious.
It is important to note that a warrant confers rights but
creates no obligations for an investor to exercise his rights.
This means that every warrant investor knows in advance exactly
what he stands to lose. There is, however, no limit to what he
stands to gain.
Warrants are a viable alternative to buying shares. They cost
approximately 25% of the underlying share price creating a
phenomenon known as gearing. On account of this cost differential
and the fact that a warrant derives its value from the underlying
share, any move in the share is amplified in the warrant. It is
gearing that sets a warrant apart from an ordinary share.
Deutsche Bank listed a warrant over the ordinary shares of
South African Breweries. This warrant has a gearing of four. This
means that for every 1% move in the SAB share price, there will be
a 4% move in the price of the warrant. The SAB warrant amplifies
all the movements in the SAB share. Money can be made (and lost)
four times faster in the warrant than in the underlying share.
Many investors are looking for quick returns out of the stock
market and warrants are designed in part with these investors in
mind.
The gearing on a warrant is an important number. Not only does
it tell you how the warrant will move in relation to the
underlying share, but it also gives you some idea of the hazards
of the warrant. As a rule, the higher the gearing on a warrant,
the greater the risk attached to the instrument.
Warrant Aware Brokers:
| BROKER |
NAME |
TEL |
| Investec Securities |
Johnathan Rogoff |
(011) 286 4763 |
| Investec Building |
Debbie Bodell |
|
| Cnr Grayston & Rivonia RD |
Paul Deuchar*, Chris Elliot,
Steve Stapylton-Smith |
| Sandton |
|
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| Societe General Frankel |
|
(011) 833 5640 |
| 2nd floor |
Derek Van Dyk, Kurt Van Vuuren, |
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| JSE Diagonal St |
Stephen Mulholland, Gareth Griffiths |
|
| |
Warren Buys, Matthew Smithyman |
|
| |
Craig Stanford |
|
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| Merrill Lynch |
Garth Curry*, Alex de Liperi |
(011) 305 5555 |
| West St |
Chris Farinia, Paul Davies |
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| Sandton |
|
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| Cahn Shapiro |
Metius Ahmed, Darren Mervis |
(011) 484 7440 |
| NO 22 Girton Rd |
Daniel Spoormaker,Jarred Cahn* |
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| Werksmans Chamber |
Abdul Cassim, Trevor Trope |
|
| East wing 3rd Floor |
|
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| Parktown |
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| J M Folscher & Co |
Ian Gouws,Jaco Very |
(011) 833 2009 |
| 5th Floor |
Ettiene Dreyer* |
|
| JSE Diagonal St |
|
|
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| Cazenove South Africa |
Michael Shakerly |
(011) 280 7930 |
| 1st floor Moorgate |
Neil Stacey |
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| Dunkeld Park |
|
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| 6 North rd |
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| Fleming Martin |
Ian Doyle |
(011) 240 2400 |
| 10Th floor Jse |
|
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| Diagonal St |
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| Nick Fredericksz |
Juan Marx, Derek Brugman |
(011) 836 2280 |
| 1st floor |
|
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| JSE Annexe |
|
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| Kerk St |
|
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| PLJ Financial Services |
Barend Saayman |
(011) 836 0381 |
| 4th Floor |
Pierre Van Rensburg |
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| Jse Diagonal ST |
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| Independent Securities |
James Mc Millan, Lance Faure |
(011) 483 0258 |
| Real Africa house 3 west St |
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| Houghton |
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| Rice, Rinaldi Turner & Co |
Allan Cooke, Earl Schofield |
(011) 836 2441 |
| 8TH Floor |
Greg Volkwyn, Chris Muller |
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| JSE diagonal St |
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| ABN-AMRO |
Murray Van Hershberg, Hein Kuhn |
(011) 240 3500 |
| 1St Floor Annexe |
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| Kerk ST |
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| BP Bernstein |
George Papaioannuo |
(011) 833 1560 |
| 3RD FLOOR |
Amy Schultz |
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| JSE Stock Ex |
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| VH Simmons & Co |
John Fisher, Rob Lachman |
(011) 442 2070 |
| 3RD FLOOR |
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| JSE Stock Ex |
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| EW Balderson |
Mike Bongartz |
(011) 492 1333 |
| 5th FLOOR |
Brad Kruger |
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| JSE Stock Ex |
Blake Weeple |
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| Barnard Jacobs Mellet |
Michelle Blaauw, Michael Ruchter |
(011) 778 0000 |
| 2 nd floor |
Theo Greef, Harietta Hawson |
|
| 195 Jan Smuts ave |
Sunel Veldtman |
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| grovenor corner |
Maya Fisher-French |
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| HSBC Simpson Mckie |
Rodney Martinison, |
(011) 481 4200 |
| 6 Riviera rd |
Etiene Nel, Stephen Liptz, |
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| houghton |
Glen Baker |
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| opposite Killarney mall |
Lawrie Slatter, Cy Jacobs |
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| |
Bruce Dunstan |
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| BOE Securities |
Chris Van Rensburg, Anthony Durham |
(011) 302 1125 |
| 187 Rivonia rd |
Belinda Esterhysen, Avril Haddon |
(011) 302 1111 |
| Morningside |
Derdrie Koetzer |
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Rodger Hellig, Steve Matjies |
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Chris Kotze, Brett Mclaren |
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Douglas McKinnon, Ashvin Mancha |
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| BOE Securities Sandton |
Paul Patterson |
(011) 784 8400 |
| 5th Floor Twin Towers East |
Mireille Ford, Alex Murray |
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| Sandton City |
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| Golding Slabbert |
Jean-Pierre Gobel |
(011) 836 7151 |
| 2nd Floor Annexe |
Johan Bongaartz |
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| Kerk ST |
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| Absa Securities |
Mike Haworth |
(011) 330 4730 |
| 28th floor Sanlam Centre |
Tony Prichard, Lee Porter |
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| Cnr Pritchard, von Brandis |
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| Martindale Stacey |
Lana Stacey |
(011) 833 7111 |
| 2nd Floor Annexe |
Alan Momberg, Brent Smith |
(011) 838 7765 |
| Kerk ST |
Tian Du Toit |
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| Lowenthal & Co. |
Andrew Hurwitz |
(011) 836 7431 |
| 9th floor 27 diagonal st |
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| cnr kerk |
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| DC Palmer |
Dave Palmer, Mike Brown |
(011) 838 2909 |
| 6th FLOOR |
Morris Banda, Dominic White |
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| JSE Stock Ex |
Dave Sweeney |
|
| |
Claus Haiml, Roy Arouca |
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| O'Flaherty Sundel |
Justin Fletcher, Wayne Edwards |
(011) 836 8367 |
| 6th FLOOR |
Bernard Montgomery |
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| JSE Stock Ex |
Hugh Sundelson |
|
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| S.P. Reid Mackeurtan |
Pierre Udwin |
(011) 834 2161 |
| 5th FLOOR |
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| JSE Stock Ex |
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| S.P. Reid Mackeurtan |
John Kalmeyer, George Rosenburg |
(011) 480 2700 |
| no7 St davids place |
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| 2nd floor |
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| Parktown |
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| CA Miller & Co |
Dryden Helling |
(011) 377 4908 |
| 2nd Floor Annexe |
Ron Klipin |
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| Kerk ST |
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| NIB Securities |
Peter McPhearson |
(011) 838 8550 |
| 2nd Floor Annexe |
Peer Iuel |
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| Kerk ST |
JR Bestbier |
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| ING Barings |
Gavin Bouwer, Clinton Lance, |
(011) 302 3439 |
| 2 merchant place |
Michael Yates |
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| 2 fredman drive |
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| sandton |
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| Irish Menel Rosenberg |
Greg Amolis |
(011) 836 8141 |
| 3rd FLOOR |
Jason Hoff, Josh Maraney |
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| JSE Stock Ex |
Laurence Lasersohn, Mark Meyberg |
|
| |
Richard Uria Saul Maraney |
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Stephen Sher, Suzie Caleiro |
|
| |
Ian Peters, Stanley Shane |
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| |
Zaheda Ismail Martk Fairclough |
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| De Witt Morgan & Co |
Jacques Maritz , Gert Pienaar |
(012) 326 1500 |
| 8th floor arcadia centre |
Wayne Badura, Emile Annandale |
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| beatrix & vermulen rd |
De waal van Wyk, Dimitri Mitropapas |
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| pretoria |
Cobus Van Wyk, Pieter Wiesse |
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Flip Buys |
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| PSG Securities |
Desmond Riley |
(011) 838 6916 |
| 6th floor First National house |
Rigard |
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| 11 diagonal st |
Johnny Macrides |
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| Jhb |
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| TA Securities |
Sheldon Halcrow,Leonard Dateline |
(011) 325 5600 |
| no 4 alberry park |
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| alberry rd |
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| dunkeld |
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| Equisec (Pty) Ltd |
Cheeta Lubbe, Robert |
(011) 836 5100 |
| 5 th floor AA life building |
|
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| 17 DIAGONAL ST |
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| Nexus Securities |
Andre van Rensburg, Hennie Le Roux |
(011) 377 1504 |
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| Consillium Capital |
Craig Cowan, Saul Geffen |
(011) 340 1300 |
| 2ND FLOOR |
Mark Sonic |
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| PRESIDENT PLACE |
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| cnr jan smuts & bolton rd |
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| Greenwich Equities |
Stephen Bacher, Benji Schleider |
(011) 832 1441 |
| 28th floor |
Greg Davis Jamie White |
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| southern life center |
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| 45 commisioner st |
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| Lomberg Pulford & Co |
Terry Pritchard, John Egan |
(011) 832 1111 |
| 5th floor First National house |
Richard Lomberg |
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| 11 diagonal st |
|
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| Jhb |
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| Regal Treasuary Sec |
Morris Fisher, Gary Israelstam* |
(011) 803 8444 |
| stone manor |
Mark Michaelow |
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| 318 rivonia boulevard |
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| Rivonia |
|
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| Standard Equities |
Richard Gush, SJ du Preez |
(011) 636 0100 |
| 3 simmonds strret |
Tracey Brits, Mark Beart |
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| JHB |
|
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| GM De Klerk |
Jacques snyman, Jan Viljoen |
(011) 838 6160 |
| 6th FLOOR |
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| JSE Stock Ex |
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