SPLITs Followers' Thoughts for 2006

My tuppence worth of tips for 2006: all warrants, three IT warrants -for a buy and hold strategy- & one slightly speculative equity warrant. All offer good gearing, between 3 & 5. They are fairly long term, so there is plenty of time for them to come good. All the ITs have strong managers & likely to outperform the FTSE- they are not going to provide spectacluar returns but I think 20%+ is possible.

The first one is PLIs. The warrant(43p) expire Aug 2013 and exercise price is 219. One advantage of these is that, unlike other warrants, you can surprisingly hold them in an ISA- useful if you are concerned about CGT.

The other two IT warrants, FWPW(132p) & MIGW(48p), expire Jul 2009 & Aug 2010 and exercise price of 464p & 100p respectively.

The Equity warrant is PLEw, the warrants of Pantheon Leisure. You may think these are too speculative but the Company is in a growth area & so there is a good potential of a rise. This is what Pantheon's said about Elms, their main trading subsidiary :
“Elms is one of the main organisers of 5-a-side football leagues in Greater London. According to statistics provided by the English Football Association, the number of adults playing this sport has grown from approximately 4.4 million in 2002 to around 6 million in 2004 and has overtaken 11-a-side football as the most played form of adult football.”

I think this is indeed a big growth area especially because there is likely to a lot of interest in football if England do well in the World cup 2006.

The warrants terms are 1:1 at 3p until Sep 2010. So, almost 5 years to expiry and with the u/l trading at 4.5p there if no time premium to pay at the current warrant offer price of 1.5p