That would be true if the stock was only worth $2. But if the stock is say worth $10 then the strategy should be to accumulate and hold as many 'cheap' shares as possible

It just could be that the bird in the hand is worth two in the bush type of thinking is occuring and that could explain why cliffs is selling now as opposed to a later date. As mentioned in the Best of the Best video, watch for a cross to indicate the time to buy more shares. In my mind, the selling of stock to buy the warrants, using today currnet share price reasoning, does make sense.