Seeking Alpha

ProShares declares 1-for-4 reverse split on 16 ETFs

  • On January 24th the reverse split will occur, artificially decreasing the number of shares outstanding and increasing the price per share for the ETFs included in the split.
  • Every 4 pre-split shares will result in the receipt of 1 post-split share and will be priced at 4 times the price of 1 pre-split share.
  • The majority of the effected funds feature short term equity strategies and have underperformed during the recent economic upturn.
  • ETFs undergoing a 1-for-4 reverse split on Jan 24th: EWV, EPV, QID, SQQQ, SMDD, SJH, SBB, SIJ, FXP, MZZ, TWM, SDD, SKK, AGQ, UVXY, SPXU,
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Comments (9)
  • robert shimp
    , contributor
    Comment (1) | Send Message
     
    I don't understand what this will do will I own a quarter of what I own and what will be the price
    16 Jan 2014, 08:11 PM Reply Like
  • spix2den
    , contributor
    Comment (1) | Send Message
     
    4x the actual price of the stock
    16 Jan 2014, 08:56 PM Reply Like
  • ChrisGriffith
    , contributor
    Comments (104) | Send Message
     
    difficult math there...
    16 Jan 2014, 11:33 PM Reply Like
  • bobdavies123
    , contributor
    Comments (14) | Send Message
     
    No big deal. Same thing happened with GDXJ last year. You don't lose money, you just get a quarter of the number of stocks that you had before but they are worth 4 times as much each.
    17 Jan 2014, 07:23 AM Reply Like
  • sa_member_756157
    , contributor
    Comments (1368) | Send Message
     
    Why do short market funds do this and when. That's the big question/s.
    17 Jan 2014, 08:43 AM Reply Like
  • wgsick
    , contributor
    Comment (1) | Send Message
     
    This reverse split also coincided with the fund being listed on the NASDAQ. In my experience reverse splits are not good, but being listed on the NASDAQ is good. So what does it mean when they both happen in the same week?
    17 Jan 2014, 10:42 AM Reply Like
  • User 9699791
    , contributor
    Comment (1) | Send Message
     
    It means everybody that bought at $35/share is going to be a big loser unless it goes up to around $150/share after the reverse split.
    17 Jan 2014, 01:08 PM Reply Like
  • Free loader
    , contributor
    Comment (1) | Send Message
     
    It’s apparent that a lot of the public don’t know why leveraged ETFs reverse split every 6 months. It’s because of CONTAGION. Research “ETF Contagion” and you will learn that even though they trade like stocks, they actually trade more like derivatives. Just like your option premium diminishes closer to expiration date, the leverage ETF loses value over time. You will also notice that when the normal ETF increases, the leverage ETF only goes up 2.5X, but when it falls, it drops 3X. If you look at the graph of these leveraged ETFs such as UVXY, they all start in the hundreds or thousands, and now they are in their teens or single digits. This will continue to happen with the reverse stock splits. These are great trading tools for down days like today, but will kill you if you hold longer than a week. The inverse of UVXY is XIV where you can take advantage of the reverse contagion. Please research what you are trading or else you will be another subprime victim.
    24 Jan 2014, 02:52 PM Reply Like
  • 7Philipchua2
    , contributor
    Comments (2) | Send Message
     
    The ETF will just decay with time just like owning option the only is it will not expiry.

     

    There is alway have the risk so invest with your own research, Thanks Free Loader.

     

    http://reut.rs/1doIygb

     

    http://nyti.ms/1doIAEM

     

    http://bit.ly/1doIAEN
    4 Mar 2014, 09:01 PM Reply Like
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