Great Move in Ford Around Warrant Expiration

If you’ve been following our recent discussion around Ford (F) and Ford warrants (FWS) and found that the trade fit your style and risk profile, congratulations! The stock has moved very predictably with the warrant expiration. A buy around $11.50 would have netted over 10% as of the high the common has hit today thus far ($12.70). That is a fairly good return on a low risk trade, especially given the fact that the overall markets were down in that same time frame. Even today, the day after the warrants have stopped trading, and a negative day for the markets (Dow down .3% and S&P 500 down .56% as of this writing), Ford is up 1.2%.

As we discussed, this was a classic warrant expiration pattern, with the stock “popping” both the day before (Dec. 21) and the last day (Dec. 24) of warrant trading, and continuing that surge the day after the warrants have stopped trading as well (Dec. 26, today). We still find it amazing that there has been no mention of the warrant expiration in the popular press as a buyback. And we have found no comparison, other than our own, to the recent GM buyback.

We would expect the stock to run a little further here, although given the move the last few days we would have sold a large % of any position established to take advantage of the warrant expiration. From a technical perspective, and we note that this statement goes well beyond the trade based on the warrant expiration, the stock appears to be breaking out of a range and headed higher. Again, the biggest hurdle to any further gain is an overall market skittishness due to the “fiscal cliff” issue.

There are many ways to profit from warrant trading, as we we have detailed in several pages here at This has been one of the more unusual expirations we have witnessed, given the cashless tender and the expiration coming so quickly on the heels of the GM buyback. If you have had the fortune to take advantage of this opportunity, again, congratulations and Happy New Year to you and yours!

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