On August 23, I posted an article regarding "INGENS - Riding the waves" when the mother share was riding high at 51c and the warrant at 19c. Since then, in a mere 5 trading days, the mother share has lost 16c (31.4%) and the warrant had given back 8c (42%) of its initial value. Has it reach its bottom or will it still plummet lower ?.
I am sure that there are people (traders, punters, investors) who made tons of money when the stock was rallying up from 12.5c to 51c (especially those who exercise the Rights Issue at 10c and got all the FREE warrants) and there are also a handful of people who lost substantial money when the stock came tumbling down. For those who are still holding, a big decision has yet to be made.
Should you :
1) hold on to the shares (hopefully one day it will recover above your buying price)
2) sell and cut your losses (bite the bullet and count your losses)
3) buy more to average down your cost (investing more money into it)
It is a difficult decision and a tough call that only you can and should make. Personally, I had been in this situation before and had made the wrong call (for 2 particular counters). Eventually the counters got delisted and i am still holding the unlisted stock until today. So much for the bad experience. Don't get me wrong, I am not implying in any way that INGENS will get into the same route. According to the INGENS BOD's announcement and their financials, the company is potentially in the growth stage with substancial increased in revenue and profits.
I did highlight in my earlier article about the risk of exercising the warrants, paying much attention to the exercise period. If you had bought the warrants at 19c and you intend to go through the warrant exercise, at today's mother share price of 35c, you still have a small upside buffer of 6c as your total cost of exercise is 19c+10c which is 29c. Bear in mind that the 6c buffer is not a lot of comfort considering that the mother share had dropped 16c in just 5 trading days.
Like I said "Everyone's trading style and apetite for risk and rewards is different". This kind of stocks provides lots of volatility and lots of upside when the trade is timed right and if timed wrongly, you could be losing a chunk of your savings. Do consult your investment advisor for their advice.