COXE Commodity Strategy Fund COX.UN Vs. COX.WT

I know warrants have been covered somewhere on this site but the search feature is not all that good and i can't find it anywhere.

On to my question.

How does this "fund" which trades at $9.82 a unit have warrants out that can be picked up for $0.015 a unit.

Should the warrants not be near the same value as the unit price?

I am really tempted to even put $500 into these warrants because unless i am missing a huge piece of the puzzle(and i probably am) there is a huge potential here.

If you were to warrants were to hit the excersize price of $11.25 would that not mean you could "excersize them?

would that not mean you would be looking at a gain of 75000%?

ie $500 now = $360,000.

Warrants are basically an option to buy. The terms are not standardized, so it could be that you need 1000 warrants to buy 1 share or something like that.

You have to read carefully the terms of the offering.

About Coxe Commodity Strategy Fund

Coxe Commodity Strategy Fund is a closed-end investment fund. The focus of the Fund is to provide investors with long-term capital growth by executing the investment strategies of Donald G.M. Coxe. Class A Units and Warrants to purchase Class A Units are listed on the Toronto Stock Exchange under the symbols COX.UN and COX.WT. Information on the Fund may be obtained at www.bmocm.com/bmosp under “Closed-End Funds”.

Sector weight as of September 30, 2010:

Agriculture 26.7%
Base Metals & Steel 20.6%
Energy 18.7%
Precious Metals 29.9%
Cash/Receivables/Payables 4.10%

Top Ten Holdings (March 25, 2011)

SPDR Gold Trust
Goldcorp Inc.
Barrick Gold Corporation
Freeport-McMoRan Copper & Gold Inc.
BHP Billiton Limited, ADR
Monsanto Company
Franco-Nevada Corporation
Potash Corporation of Saskatchewan Inc.
CNH Global N.V.
Syngenta AG, ADR

Here is how the warrants work:

Class A warrants = COX.WT

Class A Warrants may be exercised for Class A Units on and after May 16, 2011 and up to May 31, 2011 for a subscription price of $11.25 per unit. Class F Warrants remain exercisable for Class F Units on and after May 16, 2011 and up to May 31, 2011 for a subscription price of $11.25 per unit.

So I think these are called "Subscription Warrants". not like regular warrants that you buy at a certain price then cash out at the strike price.

Example:

The warrants cost you $1 to buy 1 warrant which can be excersized at $11.25. the share price per unit is at say $50. you excersize your warrant for a total cost of $12.25 and you get 1 share worth $50. giving you a $37.75 gain per unit.

Now if the strike price is not hit by the specified deadline than your warrant is worth $0.


I almost bought 1000 warrants for $100 this morning until i really looked into it.

The unit price is currently at $10 so it looks like it is a better idea to buy units @ $10 on the market rather than an warrant which would end up being $11.255