Originally Posted by
GTM 3442
I still have trouble with the “free carry” or “free held” idea, especially when it comes to being “de-risked”. Let’s plug Promisia Integrative (PIL) into the model and see what happens.
You buy 200,000 PIL at $0.006 for $1200. After a year or two, you sell 100,000 PIL at $0.04 for $4,000. Well done!
You now have 100,000 PIL. Cost $600, value $4,000 and $4,000 in cash. A total of $8,000
You have $4000 in cash, and your $4,000 cash is not at risk, but your $4,000 of Promisia shares is at risk.
MoH/Pharmac/whoever then drop their Artemisia bombshell and the Promisia share price goes to $0.002
Your current 100,000 PIL shares are now worth $200, against a cost of $600. This leaves your current PIL holding underwater to the tune of $400. How does the idea of “free held” cope with this loss?