By David Forest, editor, Strategic Trader
When we launched Strategic Trader in 2019, our goal was to bring readers fresh ideas and ways to turn dimes into dollars. We were after massive gains without putting too much capital at risk.
That’s why we focus on warrants… also known as the billionaires’ wealth-building secret.
Longtime readers of my research know the power of warrants firsthand. In fact, two of our original recommendations are in the Hall of Fame section of our portfolio today.
And for good reason.
One of those is electric vehicle (EV) charging company Blink Charging’s warrants (BLNKW) – my colleagues and I have written about it in previous essays of the Dispatch.
At the time we recommended the Blink Charging warrants, we told readers that the rise of EVs was inevitable. More and more people were buying them as automakers introduced more models.
But there’s one big problem. There just isn’t enough infrastructure to service them.
Before cars and trucks went mainstream, we needed better infrastructure to make long-distance trips possible. That meant our current highway system. It also meant gas stations and convenience stores.
Today, there are over 168,000 retail stores in the U.S. that sell gas. It’s tough to drive more than 100 miles without seeing multiple gas stations. But that’s not the case for EV charging stations…
When EVs came on the scene, you couldn’t drive past the corner store without fear of not being able to find a charging point. Not long after, you could go to the next town and back without any fear.
Today, if you plan it right, you can drive across the country. It’s difficult, but not impossible.
That’s why in February 2019, we recommended the Blink Charging warrants as a way to play the buildout of EV infrastructure. After all, EV drivers need a place to “fill up” just like everyone else.
This One Went Bad, Before It Went Up
Now, I’ll be straight here. While this was a great opportunity, things didn’t initially go as planned with the trade. This is the stock market… Prices go up and down, and you can’t always predict how it will play out.
In this case, things looked really bad almost from the beginning. In fact, at one point, we were showing a loss of more than 80% on the Blink Charging warrants.
But warrants have a way of exploding higher.
That’s why we always say patience is key. Having patience lets our proprietary T-U-V system play out. (I’ll explain the T-U-V system in one moment.)
For Blink Charging, our patience paid off… and we didn’t have to be patient for too long, either.
In a matter of a few months, the Blink warrants went from being an 80% loser to a 2,805% winner.
And we know many of our readers did even better than this – because they bought into the warrants well below our official $1 entry price.
It’s also a great lesson when we look at the positions in our model portfolio today. Even though some may be down, we’re not out.
In fact, we wouldn’t be surprised to see those take off similarly to Blink. The reason I say that is because we don’t just buy any old warrant (there are plenty to choose from). We use a simple proprietary system that overlays our detailed research, which helps us find the best warrants trading on the market at any given time.
That’s the T-U-V system I mentioned earlier.
T-U-V stands for Time Value, Underlying Stock Potential, and Volume.
Before we consider any warrant trade, we need to make sure all three criteria are met. Here’s how it works:
T – Time value. 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. That amount of time gives them plenty of room to run. Getting in at the right time is imperative. While we can see the price fall before rebounding, naturally we prefer if the price goes up from the start.
U – Underlying stock potential. 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.
We want to buy warrants that represent viable businesses, and give us a great chance of a winning speculation with minimal risk.
Remember, our mantra is, “unlimited upside, capped downside.”
The Profit Power of Warrants
The fact is, warrants are better, cheaper, and faster than stocks. That’s why the world’s most successful investors love them – even demand them.
Billionaire investors like Jeff Bezos and Warren Buffett are some of the biggest investors in warrants.
In fact, I’ve recorded a special briefing for you about how easy it is to get into these opportunities.
So check it out here before it’s gone. It could be the best investment decision you make this year, and you have nothing to lose. I’d love to have you join me.
Keep walking the path,
Editor, Strategic Trader