Warrant Watchlist 5/17/19

Yay Friday! This is an email I sent to Warrant Watchlist members, but posting it here for you guys as well. 5/17/19

I have a rare non-sports weekend for the kids, so I don’t know what to do with myself. My one chore is to have a flat tire replaced.

I unbelievably drove the car too close to the curb and hit a storm drain that was sticking out from the curb by a half inch. Sidewall puncture, new tire.

Yes I did. Ugh. And to top it off, I was pulling up to a house to drop my son off for his senior prom, take pictures, etc. First impressions are sooo key, LOL.

Yesterday I told you I’d be looking at a few SPACs today for some new warrant ideas. Two of the three I’m mentioning here were brought to my attention by you guys, thanks for the emails!

All three have announced acquisition targets. I’ll be keeping a close eye on them and letting Warrant Observer members know if I actually take a position. I’ve had a bid out in one of them today, but no position yet.

The first is KBL Merger Corp. (KBLM, KBLMW). KBL just announced an acquisition target a few days ago in the medical cannabis arena, CannBioRx Life Sciences.

You guys know we made a good trade on some earlier cannabis warrants a few months ago. And I still like warrants in the sector. 

The KBLMW reaction to the news was “Yay” and then “hmmmm”. With the announcement of a term sheet, there was also an announcement that CannBioRx has three separate business that must come to terms in the deal, and that it is going through a reorg.

So we got a de-risk with the warrants, that a deal was announced. And a hand-in-hand re-risk that it may or may not be consummated. We now have a STILL low priced warrant, even after the announcement. I like the risk reward, and would also like some more info.

Second, and staying with the cannabis theme, is MTech Acquisition Corp. (MTEC, MTECW). MTech announced in October that it would be acquiring MJ Freeway, a cannabis SaaS company. What’s not to like. A software company in a rapidly growing (and increasingly legal) market. 

I also like the warrant chart, classic. A pop on the news and then a gradual decline as investors look for the next shiny object.

The shareholder vote for approval is now scheduled for June 17, so the warrant should start moving up, if it continues to follow the classic pattern, into the meeting. This assumes there is no news from either party about issues.

What I don’t like is a lack of transparency into the MJ Freeway financials. This shouldn’t impact a trade into the vote, but gives me a little less confidence post vote performance at this point.

Third, is a singing mouse. Good old Chuck E. Cheese is apparently being reborn, in more ways than one. Leo Holdings (LHC, LHCWS) is acquiring the children’s party pit from he… sorry, flashback.  

Queso Holdings, the parent company, just reported actual good earnings, and the warrant reflects the pending going public of a real company with real earnings (sorry Uber investors). 

The shareholder vote to approve the merger is still a few months out, with no date set at this point. Let’s see if investors go shiny object on the mouse as well and give us a better entry point on the warrants. 

Coming up, next week the latest version of the Warrant Observer newsletter will drop. Let’s go for 5 consecutive winners. No pressure here, haha. 

As someone famous used to say (no idea who, but I remember the quote, kinda), see you in the funny pages. (Actually have no idea what that means, and not inclined to look it up on a Friday afternoon, but seems appropriate;) 

Have a great weekend!!!