The Complete Guide to The World’s Most Explosive Securities

The Complete Guide to The World’s Most Explosive Securities

BY DAVID FOREST, EDITOR, STRATEGIC TRADER

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THE COMPLETE GUIDE TO THE WORLD’S MOST EXPLOSIVE SECURITIESStrategic Trader

Dear Reader,

They’re the world’s most explosive securities…

They offer limited downside risk…

And here at Strategic Trader, we have a proven system to pinpoint the best ones available… giving us a legitimate shot at 1,000% gains... or more.

The mainstream term for this little-known way to make big money is “warrants.”

And in this comprehensive report, we’ll show you:

• What warrants are… and why they’re an essential tool for strategic traders,

• How they work,

• Our unique “T-U-V” system for finding the best in the world and,

• Three of the top warrants to buy today.

Let’s get started…

WARRANTS: THE WORLD’S MOST EXPLOSIVE SECURITIESA stock warrant is a security that gives the holder the right (but not the obligation) to buy a share of stock at a fixed price at any time during a pre-determined period.

In simpler terms, they’re a better way to make more money than just buying a stock outright… and you can purchase them for much cheaper (more on that in a bit).

Now, some people will compare warrants to options. And they’re similar… But there are two major differences.

One, warrants are issued by the company itself – not a third party, like an exchange. The second difference is gains. Warrants are much more lucrative.

Warrants are used to “sweeten the pot.” They’re an incentive created by the company to induce investment support at a time when support is thin. That can mean a tough time in the industry (think banking in 2010, offshore oil in 2017, or gold mining in 2015)... or it can be company-specific.

Either way, they’re an essential tool for traders that many investors don’t even know exist.

And here’s the best part: Anyone with a brokerage account can buy them. No options agreement, no margin account, and no special accredited status is needed.

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They can be bought and sold just like a stock. And they often produce far greater returns, offering leverage to a rising stock price. I’ll tell you more on that in a bit.

Before we get started, it’s important to acknowledge we’ve seen plenty of volatility in the market lately. These warrants may have fallen recently along with the rest of the market.

But we still have plenty of conviction that these are great investments. In fact, due to the recent volatility, now is a great time to pick them up at bargain prices.

Now, there are a few key things to know about warrants, including:

• The “expiration date.” Warrants expire at some point (like options do). They’re only available for a limited amount of time. What we discovered is that you want to pick up warrants that have a long time to expire.

• The “exercise price,” also known as the “strike price.” This is the fixed price at which the company will sell shares to the warrant holder at any time before the expiration date.

• When a warrant is listed on an exchange, its ticker will often be the same as the company’s common stock with a “W” or “WS” added to the end, sometimes separated by a period (.) or a forward slash (/). For example, NextDecade (NEXT) has warrants listed on the Nasdaq under the ticker NEXTW.

Now, some warrants are different and use the conventional symbol.

For example, Hostess’ stock ticker is TWNK. Its warrant ticker is TWNKW. Here are some screenshots from a TD Ameritrade account on the mobile app:

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One of the easiest things to do is just type in the ticker for the underlying stock and the warrants should pop up. Then, you can click on the warrant to trade it:

Let’s look at a quick example so you can see how warrants magnify returns on a stock.

HOW WARRANTS MAGNIFY OUR RETURNS

Take offshore supply vessel company Tidewater. The company suffered a major slowdown after the 2010 Deepwater Horizon explosion. When the offshore oil business slowed, the company had too many ships and too few customers. Its revenue fell to a level below what it needed to service the debt on those ships.

Tidewater went bankrupt in a prearranged plan with its creditors. The creditors reduced their claims on the company from $2 billion to $440 million. That was a level the company could afford in light of the business slowdown. In exchange, the creditors would own stock in the reorganized Tidewater.

Tidewater relisted its shares in July 2017 for $25. Creditors also had warrants to buy an additional share of the company’s stock at $57 any time before July 2023. That’s seven years from its relisting date. Some investors sold these warrants right away in the open market. I bought 1,000 of them for $1.44. I sold them in October 2018 for $5.25. That’s a 260% gain.

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But warrants aren’t only issued in the resource market. Take the 2008 financial crisis, for instance. Bank stocks cratered. They had to raise capital immediately to shore up their balance sheets. Naturally, investors didn’t want to touch bank stocks. To entice shareholders, the banks offered warrants, which sweetened the deal for investors. Here’s a list of what happened to these warrants over their 10-year holding period. Notice some of them were up as much as 3,067%.

Underlying Company Ticker Symbol

Warrant Ticker

Strike Price

Warrant Issue Date Expiration Entry

Price Exit Price

Warrant Return

Associated Bank ASB ASB/WS $19.77 12/1/11 11/21/18 $0.85 $7.11 736%Bank of America BAC BAC/WS $12.66 1/15/09 1/16/19 $1.96 $18.28 833%Boston Private Financial BPFH BPFHW $7.11 11/21/08 11/21/18 $1.32 $9.44 615%Cathay General CATY CATYW $20.59 12/5/08 12/5/18 $5.51 $22.37 306%

Comerica CMA CMA/WS $29.40 11/14/08 11/14/18 $4.34 $61.75 1323%First Financial FFBC FFBCW $12.20 12/23/08 12/23/18 $3.65 $20.50 462%JP Morgan JPM JPM/WS $41.62 10/28/08 10/28/18 $7.91 $75.00 848%M&T Bank MTB MTB/WS $73.86 12/10/12 12/23/18 $25.95 101.64 292%PNC Financial PNC PNC/WS $67.33 12/31/08 12/31/18 $6.69 $70.30 951%Signature Bank SBNY SBNYW $30.21 12/12/08 12/12/18 $10.00 $85.50 755%Sun Trust STI STI/WS A $33.70 12/31/08 12/31/18 $2.46 $40.50 1546%Sun Trust STI STI/WS B $44.15 11/14/08 11/14/18 $1.25 $23.19 1755%Texas Capital Bancorp TCBI TCBIW $14.84 1/16/09 1/16/19 $6.80 $77.00 1032%TCF Financial TCF TCF/WS $16.93 11/14/08 11/14/18 $0.91 $9.10 900%Wells Fargo WFC WFC/WS $33.64 10/28/08 10/28/18 $6.65 $25.85 289%Wintrust Financial WTFC WTFCW $22.82 12/19/08 12/19/18 $9.00 $66.62 640%Zions Bancorp ZION ZIONZ $36.27 11/14/08 11/14/18 $0.45 $14.25 3067%

In fact, you could have purchased one SunTrust warrant for $1.30 plus a regular trading commission and sold it for $23.19… using any online brokerage account.

But it’s not just the big gains that make warrants one of the best investments today…

WARRANTS LIMIT DOWNSIDE RISKWarrants offer a way to profit without breaking the bank. It only takes a little bit of money to capitalize. Here’s what I mean by that…

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You can buy a warrant for a tenth of what it would cost to buy the underlying stock.

Take Encompass Health – a hospice care provider.

Back in 2015, the company’s common stock returned 34% in six months. But the warrants did much better. You could have pocketed 508% over the exact same time frame. And the warrants would have cost you pennies on the dollar. Anybody who bought the stock paid $30.91 a share. However, the company’s warrants sold for just 74 cents. This is what we mean when we say warrants truly offer unlimited upside with capped downside.

If the company soars, the warrant will be worth a fortune. If the company does okay, the warrant will still be worth quite a bit of money. If the company flames out, it just expires worthless. No harm, no foul.

Now, you may be wondering how we find the best warrants to buy…

It all boils down to our proven, proprietary system…

OUR PROVEN SYSTEM FOR FINDING THE WORLD’S BEST WARRANTSYou see, we have a unique way to determine the safest ones with the most upside potential: We call it our “T-U-V” system. It stands for Time, Underlying Stock, and Volume.

Before we consider any warrant trade, we need to make sure all three criteria are met.

Let’s break it down:

T – Time. Time is money, and we want to get a free ride on the cheap. Our “sweet spot” is warrants that expire in three to five years. As we mentioned above, we want to give them room to run. Getting in at the right time is imperative. The difference between two months could cost us thousands.

U – Underlying Stock. We need to see that the underlying stock is strong and has big upside ahead. We don’t buy any warrants on a stock that we wouldn’t consider buying on its own.

V – Volume. We eliminate even the best warrants if they don’t trade. Some don’t have enough outstanding, and others are locked up in a few hands. We discard those, even if they’re valuable.

With our system, we’re able to pinpoint the very best warrants to own. And again, we don’t consider any warrant unless it passes this test.

I hope now you see just how lucrative buying warrants can be… and why they’ll be a big part of what we do here at Strategic Trader. With that, let’s look at the top three warrants to buy today... and the massive trends that will push them higher in the years ahead. These offer a real shot at 1,000% gains, as you’ll see…

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THREE TOP WARRANTS TO BUY TODAYNo. 1: An Explosive Way to Play the 5G Boom

The 5G network will revolutionize the way we use data. It will allow for much faster data transfer rates and a much higher volume of mobile data. That’s how we get things like fleets of self-driving cars and smart cities.

But before all of this can happen, the existing network needs an upgrade. That’s where COMSovereign Holding (COMS) comes into play.

COMSovereign is an end-to-end telecom solution provider. The company provides hardware, fixed wireless and small cell access points, and intelligent battery systems. It also provides clients – including the military – with secure private networks.

COMSovereign went public in 2019 through a roll-up of several companies. The goal was to position the overall business to take advantage of the 5G buildout. Part of that includes upgrading legacy technology.

Companies are spending hundreds of billions of dollars building out the 5G network. That includes everything from the actual spectrum (airwaves) needed to operate their networks down to the equipment to make it work.

COMS lives in the equipment space.

That includes small cell radios designed to connect to other access radios or directly to mobile devices. That’s what helps enable the wireless networks we depend on today.

It also includes equipment designed to help the 5G network reach its potential. Some of today’s tech uses two independent communication channels for data transmission. That means you need twice the spectrum.

That limits the network’s ability. COMS is set to start offering its In-Band Full-Duplex (IBFD) technology, which will allow data to be transmitted and received on a single channel. It also frees up even more spectrum to really help push the 5G network forward.

Overall, the global telecom equipment market is about $468.4 billion, according to Market Research Future. About 38% of that market is in North America alone.

That’s a $178 billion potential market that COMS is tapping into. That means even a small fish like COMS can swim in the pool with the big whales. There’s money for everyone.

And that’s our opportunity.

However, COMS is still a tiny company. Last year, COMS brought in $9.4 million in sales. That’s double its revenue in 2019. Gross margin was 51.2%, up from 36.5% in 2019.

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That’s a good sign, but the company is still losing money. At a $180 million market cap, shares haven’t gotten much attention from investors… yet. But with insiders owning 36% of company shares, they’re making a big bet that COMS’ best days are ahead. And we’ll play it with the company’s warrants.

COMSovereign Holding Warrants (COMSW)

Underlying Stock COMSWarrant Symbol COMSW

Expiration Date 1/26/2026

Strike Price $4.50

Conversion 1 warrant = 1 share of stock

Warrants Outstanding 3,855,422

Here’s how COMSovereign warrants stack up in our T-U-V system.

T – Time. The company issued the warrants on January 26 as part of a capital raise. Those warrants expire on January 26, 2026. That means we have nearly five years to see management execute its plans. That’s more than enough time to let things play out.

U – Underlying Stock. COMSovereign is a roll-up of a number of communications tech-related businesses. It’s all-in on the 5G buildout. That’s a good place to be for a small company looking for even a small piece of a multibillion-dollar pie.

V – Volume. Since their debut, the warrants trade an average of about 123,000 per day. That should be enough for patient speculators to build a small position.

Keep in mind, COMSW is still a risky bet. The company may continue to lose money for a while until it can ramp up its efforts. That’s why we like the warrants over the stock. We get a leveraged bet on the company succeeding while risking less capital than buying shares.

But if the company executes and takes just a tiny fraction of the 5G pie, it will pay off handsomely for the warrants. With the 5G buildout in full swing, it’s a good bet we’ll see that happen.

Action to Take: BUY the COMSovereign January 26, 2026 $4.50 warrants (COMSW) up to $2.25. Use a limit order close to the market price.

Please note: In order to have investing success, it’s absolutely essential to maintain discipline. The right warrant at the wrong price won’t do you much good.

If these warrants are trading above our buy-up-to price by the time you read this, be patient and don’t chase it higher. Always use limit orders when trading warrants. And never bet more money than you can afford to lose when establishing your position.

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Now, let’s look at our second opportunity…

No. 2: Speculating on Precision Medicine

BiomX (PHGE) is on the hunt for the next great medical breakthrough.

Born out of the Weizmann Institute of Science and MIT, the company designs and develops phage treatments for disease-causing bacteria.

Phage therapy, or bacteriophage therapy, is not new. Scientists Frederick Twort and Felix d’Herelle discovered bacteriophage in the early 1900s.

Phage are essentially viruses. They only attack certain bacteria and are harmless to people, animals, and plants. Pharmaceutical companies can bioengineer phage to target specific bacteria, to fight diseases that resist other treatments.

As recently as the 1940s, pharmaceutical companies in the U.S. developed and sold phage treatments. For instance, Eli Lilly and Company sold a “Staphylo jel” product for treatment of the Streptococcus bacteria. However, phage research took a backseat after the discovery of antibiotics. That’s all about to change. Since new superbugs are resisting traditional antibiotics, scientists have to find other ways to treat patients. BiomX is one of the companies at the forefront.

BiomX is a clinical stage drug company. That means it has no actual products to sell. It’s developing drugs for potential use in the future.

BiomX uses a three-phase system when developing phage therapy: phage hunting, phage engineering, and cocktail optimization.

Source: BiomX

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From there, the company tries to prove its custom therapies work through clinical trials. That’s where BiomX stands today with its three research programs.

The first program is a phage therapy to help clear up acne. The global acne medication market is huge. It’s about an $8 billion industry today, according to Allied Market Research. In March 2020, the company released its Phase 1 cosmetic clinical study for its acne treatment. The results were positive. Not only did the treatment show safety, there was also a significant reduction of acne in patients. This is good news.

Phase 2 trials were launched in March 2021. Results are expected around the end of the year.

The second program is for Inflammatory Bowel Disease (IBD). There are several types of IBD – including Crohn’s and celiac disease. BiomX is targeting “leaky gut.” This is when cracks appear in the lining of your intestines, allowing bacteria to “leak” into other parts of your body. It can be fatal in some cases.

IBD affects around 1.6 million people in the U.S. BiomX is working to target its cause. The company expects Phase 2 clinical data by mid-2022.

The third program is for primary sclerosing cholangitis (PSC), an orphan liver disease. PSC restricts the flow of bile from the liver to the intestines. A diagnosis of PSC usually leads to liver failure within 10 to 15 years. While it doesn’t affect many people, there’s no existing therapy today. The company expects to see results from both Phase 1 and 2 for PSC mid-2022.

While those are the most advanced studies to date, the company is working on a number of other disease treatments. That includes treatments for cystic fibrosis, atopic dermatitis, and colorectal cancer. If the results for any of these programs are promising, it will give BiomX stock a huge boost. Instead of buying the stock, we’ll play it a different way.

BIOMX WARRANTS (PHGE.WS)When companies list through these types of mergers, the original owners of the “blank check” company often issue warrants. That’s why there are 7 million warrants outstanding to purchase BiomX shares.

BiomX Warrants (PHGE.WS)

Underlying Stock PHGEWarrant Symbol PHGE.WS


Strike Price $11.50

Conversion 1 warrant = 0.5 share of stock

Warrants Outstanding 7,000,000

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Remember, warrants give us all of the upside with less risk. In this case, 1,000 shares of BiomX stock would run us $5,870 today. On the other hand, 2,000 warrants cost only $1,140 at today’s price. That means we still have exposure to 1,000 shares of stock if the company’s business takes off. (Each warrant equals 0.5 shares of stock.) We just pay a lot less for it.

Again, keep in mind we’re not scientists or biotech guys. But we see microbiome technology as a huge trend in future medical treatment. We have a chance to play this emerging trend for pennies on the dollar.

This is why we like warrants. In an industry like biotech, buying warrants gives us a huge advantage over owning the stock.

It’s a lot like speculating in mining stocks. When you hit, you hit big. A lot of times, you miss.

Let’s look at the company through our T-U-V system.

• T – Time. There are about 3.5 years until the October 2024 expiration. That’s enough time to get some clinical trial results in.

• U – Underlying Stock. There are a number of catalysts for the stock. Most of those are results from its ongoing clinical trials. If results look good, the stock will rocket higher. Owning the warrants gives us leverage to those announcements.

• V – Volume. The average daily volume for the warrants over the past year is nearly 15,000. That should be plenty of volume for speculators to build a position.

As you can see, the BiomX warrants check all the boxes. And now’s the time to get in.

Action to Take: BUY the BiomX October 28, 2024 $11.50 warrants (PHGE.WS) up to $1. Use a limit order set close to the market price.

No. 3: A Second Chance to Cash in on the Cannabis Boom

One of the surest ways to make a fortune speculating is to get in front of a massive trend. When you can do that with warrants, it can be the difference between making thousands of dollars… and tens of thousands of dollars.

But as we’ve said before, you don’t need to speculate on the companies directly involved in that trend. For cannabis, that means we don’t need to find a grower or retailer. In fact, we’d rather speculate with a “picks-n-shovels” play, because there’s less risk involved.

That’s where Akerna (KERN) comes into play. Akerna isn’t your typical cannabis company. It happens to be one of the largest cannabis technology companies in the world.

Akerna provides enterprise software that helps users navigate the legal landscape. The company never touches a cannabis plant. It just provides the technology companies need to produce and sell legally.

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In such a highly regulated industry, Akerna’s software is increasingly important. That’s why founder and CEO Jessica Billingsley started the company – then called MJ Freeway – in 2010. She realized a budding industry didn’t have a solution to navigate a potential minefield of rules.

Today, Akerna is number one in market share in the cannabis software market. To date, the company enabled over $20 billion in transactions through its software.

That’s not a surprise. The company serves clients from seed-to-sale. That includes cultivators, manufacturers, distributors, and retailers. It also includes state and local governments.

Source: Akerna

Akerna has the largest footprint in the U.S. and Canada. It also operates in over a dozen other countries. We expect that lead to grow… fast.

So far this year, the company is growing organically at a 33% rate over 2019. Keep in mind, Marijuana Business Daily expects the economic impact of cannabis to grow to $130 billion by 2024 in the U.S. alone. That’s up from about $38 billion in 2019.

That number doesn’t just include the growers and retailers. It includes businesses like Akerna that provide services to the cannabis industry. In fact, the companies that serve the cannabis business are set to benefit more from legal cannabis sales.

According to New Frontier Data, that could mean a market size of $2 billion for Akerna. That’s a lot of runway for the company to cover.

But it’s not just organic growth that will power Akerna in the future. The company is making strategic acquisitions to further its lead.

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That’s because the early boom in the cannabis space was a land grab. When legal cannabis opened for business, everyone wanted in. And everyone was printing cash, including investors. Then the bubble popped, and stocks cratered.

However, as the market starts to mature, we move into the consolidation phase. That’s where we are today, and Akerna is making the most of it.

Last year, Akerna acquired Ample Organics and Trellis Solutions.

Trellis is software made for cultivators, manufacturers, and distributors. Some of California’s largest brands today use it.

Ample Organics is the leading Health Canada-approved software for Canadian licensed producers. It also happens to have majority market share in Canada.

When you have a government organization recommending companies using your product, that’s a great position to be in. Even better is when it mandates that product.

That’s the case in Pennsylvania and Utah today. In both states, licensed cannabis operators are required to use Akerna’s software for compliance.

Utah also mandates another one of Akerna’s products, solo*TAG™, to keep track of the cannabis supply chain. It’s the world’s first cryptographically-secure, cannabis product authentication system.

And the best part is, Akerna’s software is cloud-based. It’s what we call Software-as-a-Service, or SaaS. That means it gives Akerna a stream of recurring revenue through subscriptions to its software.

All of these things play into Akerna’s hands, giving it a leg up on the competition. That means going forward, the company’s biggest competitor – your old-fashioned Excel spreadsheet – is on the way out.

However, we don’t want to play the second cannabis boom by owning the company’s stock. We want to play it by speculating with the Akerna warrants (KERNW).

Akerna Warrants (KERNW)

Underlying Stock KERNWarrant Symbol KERNW


Strike Price $11.50

Conversion 1 warrant = 1 share of stock

Warrants Outstanding 5.8 million

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Just like with a number of our recommendations, Akerna went public last year through a SPAC, MTech Acquisition. That’s where the warrants come from.

Remember the chart of Akerna stock we showed you above? Shares took off like a rocket shortly after the company completed the merger. The warrants did the same. But just like with the stock, the warrants fell after the cannabis bubble popped. They’re now about 80% off their June 2019 high.

That’s what gives us the chance to buy into these warrants today.

As always, before we put together buy-up-to guidance, we need to run the warrants through our T-U-V system.

Here’s how Akerna stacks up:

T – Time. The warrants have about three and a half years until expiration. That’s more than enough time to see the continued rise in legal cannabis sweep the U.S. and other countries.

U – Underlying Stock. Akerna is a small company solving a problem in a massive industry. Even better, more and more places are legalizing cannabis. Getting in on that trend as the industry grows up is how fortunes are made.

V – Volume. The average daily volume for the warrants over the past year is over 55,000. That’s a little on the lower side, but it’s enough volume for patient speculators to build a position.

Action to Take: BUY the Akerna June 17, 2024 $11.50 warrants (KERNW) up to US$1.50. Use a limit order.

Remember: When buying warrants, it is absolutely essential to only use limit orders. Warrants can trade in a lumpy fashion. You might have to wait for a few trading days for your order to fill. Patience is essential. You don’t need many warrants to have a great position.

Please note: With all of these trades, it’s important that we manage our risk. If these warrants are trading above their buy-up-to prices by the time you read this, be patient and do not chase them higher. You should NEVER bet more money than you can afford to lose. And ALWAYS use limit orders when placing these trades.

Regards,

David ForestEditor, Strategic Trader

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The Complete Guide to The World’s Most Explosive Securities

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