JPMorg EM Sub Share Discussion Threads

[aishah] 13/5/2014 13:09

Good summary. I took a contrarian view of EM back in Jan and took some @11p. Sliced a few at 19p spike later on. Option money here so may end up worthless or 40-50p. Time will tell.

[tiredoldbroker] 13/5/2014 11:44

Just to clarify for anyone looking:

These are not "sub shares" if you take that to mean a fraction of an ordinary share. They are subscription shares, like warrants. They carry the right to buy an ordinary share at 543p (so your outlay would be 543p + the price of the sub share), until 31 July 2014. So they are a highly geared, short-term play.

The current price of an ordinary share(JMG) is 554p but the NAV is more like 609p. So your 20p buy price on JMGS plus 543p subscription gives you 563p... a small premium to the ordinaries, but a discount to NAV.

I wouldn't really trade this unless you had cash to spare and were happy to take up the ordinaries and hold longer term in the event of a correction in the market between now and 31 July. In case you don't understand the arithmetic, you only have until 31 July this year, then the JMGS units are worthless; and you could easily lose your entire investment if the market goes the wrong way or the discount widens.

[peterbill] 28/1/2014 16:01

Personally, I think there will be a turn to Emerging Markets ...

Google now has a larger market cap than the whole of the MSCI Brazil
Wells Fargo has a market cap larger than the MSCI India
Starbucks is valued at more than the MSCI Turkey

DYOR etc.

[andrbea] 28/1/2014 15:03

isn't strike price 543 + subshare at 13.5 = 556p to beat
parent share at 504, so parent share has to regain 556 before you can exercise and be in the money
seems a long shot still.

so harder to understand that jmgs is up 42% today

[peterbill] 28/1/2014 09:35

Bid/Offer Spread 7p/14p - quite large, but these move quickly so could be back in the money by July.

Picked some up at 13.9p - gambling that emerging markets will back on track?

[andrbea] 02/2/2012 12:18

keeps on rising

[andrbea] 01/2/2012 16:27

looking at subshare jmgs it looks attractive just now

subshares cost 93.5p

you can exercise it (or choose not to) every July up till July 2014

the exercise price in 2014 is 543p

the underlying parent share is 560p currently (was 500p in Dec 2011)

so when the parent reaches a certain level the subshare is in the money

ie 543 + 93 = 627p

[peterbill] 11/12/2010 12:51

sold half my holding at 171p .... it's more than a free ride for the remainder, bought initially at around 40p :-)

[hectorp] 03/8/2010 10:28

Dropped right back, now round 85p.. chart hints of a possible U formation which is 2/3rds complete ( ie back to 125p?0 worth a dabble now.

[tarvold] 06/4/2010 14:21

The mid price is screwed up, it should be around the 117p mark.

[kimboy2] 06/4/2010 13:55

My screen is showing 114-120p but the graph doesn't seem to have updated.

Anyone know why ?

[hectorp] 18/3/2010 16:21

Another one that I'm too late to get into.
Need some lowly priced ones that havent taken off yet!
Maybe we can have a retrace to 42p please?

[p1966] 13/3/2010 20:57

Thankyou to everyone for your comments.

I have just had a look at JIIS for January 2010 and, I do see, that was quite a wobble. Of course, that was with a 20p increase in the exercise price, where the underlying subsription share price was approx 150p.

With JMGS subscription shares, the uplift will be 40p, on a subshare price that is around 100p. So, potentially a much greater impact - be interesting to see what happens.

Looking ahead, I suppose the subshare 543p exercise price for 2014 would require a 20% uplift in the current JMG ordinary share price to maintain the current value of around 100p in the subshares. We have had a great bounce this year, which I don't imagine could be repeated. But 20% over 4 years shouldn't be too stretching, and maybe we could hope for a little more.

Phil

[maxwellsdemon] 10/3/2010 21:58

It is both rising market and falling pound.


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[kimboy2] 10/3/2010 10:53

Absolutely but the sub shares are geared to a falling pound and you would perhaps expect the countries with the fastest growth rates (emerging markets) to have the strongest currencies.

All other things being equal.

[tarvold] 10/3/2010 10:29

No doubt, along with any other IT,fund or company investing overseas.

[kimboy2] 10/3/2010 08:34

JMG has been benefitting from the falling pound recently.

[tarvold] 10/3/2010 08:32

P1966
Yes the subs do act in a curious manner.
However don't forget that the exercise price increases by 40p in August. Based upon what happened with JII/JIIS this change will be factored in before the exercise price change date over a period of time.

Keep an eye on the price difference but also the NAV discount for JMG.

[p1966] 09/3/2010 21:17

Any views?

The sub shares (JMGS) closed today at (mid price) 93p. Add the July 2010 excercise price of 422 pence, and you get 515p. This contrasts to a share price (JMG) (mid price) of 518.5p.

I would normally expect a warrant / sub share to trade at a premium, on the basis that you have got the gearing and a life of a couple of years (albeit with stepped exercise prices in the case of sub shares).

However, if I have understood correctly, the sub shares are currently trading at a discount? This has been the case for at least a week or so.

If I had £1m in my pocket, I would suggest this was an opportunity for arbitrage - buying the subs, exercising, and then selling the shares - and pocketing the (small - hence the need for £1m) difference. Only problems 1) I don't have £1m, and 2) the normal market size of the subs is very, very small, and I don't think there is a lot of liquidity - despite the fairly hefty market cap. of the ordinary shares.

Long story short - I currently plan to be in the subs for the longer term (so am not trying to ramp), but surely this suggests they are underpriced?

[kimboy2] 07/1/2010 22:23

Yes the graph looks very nice doesn't it. I have put a fair bit in the sub shares and am quite optimistic barring further upset. A pretty good risk/reward IMV.

The actual investments seem well dispersed though I haven't looked at the individual investments. The track record seems OK.

The main attraction to me was a geared investment in a good emerging market IT.

I quite liked the comment by the manager in the AR;

The typical evolution of a market recovery divides into several phases and we do not expect this one to be different. First, fear slowly abates and valuation rises towards previous norms. Second, valuations do not stop but go on to look expensive. Third, corporate profits come out ahead of expectations and valuations in fact turn out to be normal after all. Fourth, valuations rise again and the market really does become over-valued. Fifth, company profits begin to undershoot expectations but nobody cares, such is the momentum in share prices and the fear of being left behind. Sixth, reality strikes and it is all over. The markets we invest in are not all identically placed, but most of them are in the second phase and some are moving into the third; the first phase of the normalisation of valuations has been largely completed in the space of a few months.

[p1966] 06/1/2010 22:28

Thankyou, that is an interesting post, andrbea, and a very good summary.

I have a holding in JMGS, and am particularly attracted by the combination of high gearing and low premium on the current 422p exercise price - and even the premium of the 460p / July 2012 does not seem demanding......

.....so long as the underlying JMG continues to rise. It is a largish fund, with a long track record, but I suppose much depends on how Emerging Markets will perform, generally, over the next 12 months.

I would be interested if there are any views out there.

[andrbea] 17/11/2009 15:44

an old post, as background:

You'll see that the 2010 exercise price for JMGS is indeed just 422p - so the shares are in the money already. And with the share price at 470p when I last looked and the sub share just 56p then the warrant is trading with very little (just 8p) extra to pay for time value. So YES this sub share is astonishingly cheap, but so are several others including ADDS,UEMW and UEMX. JIIS, NIIW and JAIS. Others in the posts above and a few more not in those posts are also technically very cheap.

The key question is whether markets are now at a peak for many months. If so the fact that these warrants and sub shares are stonkingly cheap is not much good if the share prices all go down, though their cheapness might limit the warrant price falls if that happens.

What you CAN be absolutely certain of is that if the shares listed in the posts above can keep rising then the warrants are going to go up fast and much faster than the shares.

Best for upside imo of the IT warrants/sub shares is JMGS because of the 8 times gearing. So I haven't made that up - another 10% on the JMG share price should see the sub share double. IF JMG shares disappoint between now and the 422p exercise price July 2010 date, then there are further exercise dates at 460p until July 2012, and this one too is just about in the money already, and then a final one at 543p up to July 2014

[andrbea] 17/11/2009 15:44

This is the subshare to jmg