You have more than one option if you want to invest in a company.

I recently got an email from Ramon asking me about one way:

I would like the thank Money & Markets for all the good information that we receive every week, and I would like to see if you may share information regarding investing in warrants.

Informed investors want to know the differences between warrants and options, as well as the pros and cons.

In this episode of The Bull & The Bear, I’ll tell you about stock warrants and whether they make good investments or not.

Warrant Use Driven Up by SPACs

Warrants aren’t uncommon, but their use has been driven up by special-purpose acquisition companies (SPACs).

SPACs, or blank-check companies, are publicly traded companies whose sole purpose is to raise funds through the public market to buy one or more private companies.

When the SPAC buys a private company, that private company becomes public, thus avoiding the traditional initial public offering (IPO) process.

According to SPAC Insider, 248 SPACs raised $83.3 billion in 2020, overtaking the record of $13.6 billion raised in 2019.

80% of SPACs Included Warrants in 2020

Of those 248 SPACs, 80% of them included warrants in their structure.

This means investors could buy a share and the right to purchase additional shares at a predetermined price after the SPAC went public.

There are pros and cons to buying warrants. I’ll tell you what those are and give you my take on buying warrants.

Pro tip: Chief investment strategist Adam O’Dell is bullish on biotech. I urge you to check out Adam’s presentation on what he calls “Imperium.” He's confident this DNA trend has the potential to be bigger than internet stocks in the ’90s. Click here to find out more, including the details on how to access Adam’s top four DNA stocks to buy today.

The Bull & The Bear

Led by Adam O’Dell and a team of finance journalists, traders and experts, Money & Markets gives you the information you need to protect your nest egg, grow your wealth and safeguard your financial well-being.

You can listen to The Bull & The Bear on Apple PodcastsSpotify, Amazon and Google Podcasts. Make sure to subscribe and leave us a review.

Be sure to also subscribe to our YouTube channel for more videos like my weekly Marijuana Market Update. You can find more investing insights from Adam and Green Zone Fortunes co-editor Charles Sizemore in our Ask Adam Anything and revamped Investing With Charles videos, respectively.

Have something you want us to talk about? Email thebullandthebear@moneyandmarkets.com and give us your thoughts.

Check out moneyandmarkets.com, and sign up for our free newsletters that deliver you the most important and unbiased financial news, commentary, and actionable advice.

Also, follow us on:

Facebook
Twitter
LinkedIn

Safe trading,

Clark_Sig

Matt Clark, CMSA®
Research Analyst, Money & Markets

Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.