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发帖数: 10345 | 1 半年两次10：1并股，太牛逼了。
Why the UWTI Did a Reverse Split
By Nathan Buehler | January 12, 2016
On Sept. 10, 2015, VelocityShares 3x Long Crude Oil ETN (NYSEARCA: UWTI)
performed its first reverse split using the closing indicative value from
Sept. 9, 2015. This was necessary due to the low value per share after
months of crude oil declines and the expenses that come along with a highly
leveraged fund.
What UWTI Tracks
UWTI is an exchange-traded note (ETN) that tracks a subset of the S&P
Goldman Sachs Commodity Index. This index only invests in front-month
futures contracts for West Texas Intermediate (WTI) crude oil. WTI is the
benchmark for U.S. crude, and its sister, Brent, is the benchmark for crude
outside of the United States.
What Is a Reverse Split?
A reverse split occurs when a company, or, in this case an issuer, wants to
raise the stock price of the underlying security. No material value is
gained or lost through this process. UWTI provided holders one share for
every 10 outstanding shares before the split. If you had 10 shares worth $10
each before the reverse split, you would hold only one share worth $100
after.
Why Perform a Reverse Split?
Funds such as UWTI incur fees and costs related to cases of very high
volatility. Daily rebalancing of the fund impairs its performance relative
to its index over time. By creating a reverse split, VelocityShares slightly
reduces the drag caused by very high periods of volatility. It also
provides an illusion that the fund does not decay over time. Investors are
more likely to use a fund that is trading above $3 per share for maintenance
margin requirements.
Why Has UWTI Fallen So Much?
Crude has had a rough year. In July 2014, WTI crude oil was over $100 per
barrel. As of November 2015, WTI crude has declined to around $40 per barrel
. When accounting for UWTI's 3x leverage, this would represent a loss of 180
%. Since this happened over a longer period of time and a reverse split was
factored into the current share price, UWTI has not gone to zero.
In addition to the drop in WTI crude, 3x leveraged exchange-traded products
naturally decay over time. These instruments provide three times the results
of the underlying index over the period of one trading day. During periods
longer than one trading day, leveraged exchange-traded products begin to
deviate from their respective indexes.
When the fund purchases front-month futures contracts, it generally must do
so for a slightly higher price than it could sell them for when the fund
must roll over its contracts to the next front month. This difference in
price is known as contango, while the opposite effect is known as
backwardation. Typically, most commodity futures contracts trade in contango
, which causes a slight value decay in the fund over a long period of time.
Risks of Investing in UWTI
UWTI is a sophisticated instrument meant for professional investors seeking
to achieve short-term trading goals. Leveraged exchange-traded products
should never be used as long-term buy-and-hold investments. These types of
funds can go through several reverse splits over short periods of time
(periods less than a few years), leaving your initial investment practically
worthless.
The Chances of Future Reverse Splits
UWTI has a very good chance of performing reverse splits again in the future
. Since performing the last reverse split, the fund is down over 30% as of
November 2015. If VelocityShares intends to keep this ETN open, it will
perform the reverse split if the price per share falls to a point where it
would begin driving away investors. With a market cap of almost $1 billion,
this fund is a moneymaker for VelocityShares, and it will do what's
necessary to keep UWTI going. |
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