Experts. Why does a stock do a Reverse split?

Concrete Helmet

Hook, Line, and Sinker
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Jul 29, 2014
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Anyone know why this happens? I just looked at my iShares Gold Trust this morning and the balance had more than doubled:sohappy:....however it had a message that read it would correct the balance tomorrow...:banghead:. Each share was supposed to be worth a hundredth once of gold(minus premium)...What gives?
 

FireFoley

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I can't comment directly on your particular holding, but I believe that is an ETF. ETF's are different than common stock and the one you have, like other commodity ETF's is based on the entire Futures Curve, meaning the ETF owns a certain amount of each contract on the Futures curve. So when the near term contract expires, they have to sell those contracts (to avoid taking or making delivery) and re deploy the money along the curve at certain prices (could be higher or lower depending on whether the curve is in contango or backwardation).

But to answer reverse stock splits. It could be to prevent from being delisted and being relegated to the pink sheets or the over the counter bulletin board.. Depending on exchange, stocks get delisted if they fall below a certain price. So by shrinking the float you increase the price per share, but total valuation remains the same.
 

Gator By Marriage

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Many years ago I owned a Gabelli Utilities fund that while more or less stagnant in price, it paid a solid $.07/share dividend every month. It was great right up until they did a reverse split. It still paid the same dividend, only now you had half the number of shares. Price has more or less declined ever since.
 

Concrete Helmet

Hook, Line, and Sinker
Lifetime Member
Jul 29, 2014
22,041
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I can't comment directly on your particular holding, but I believe that is an ETF. ETF's are different than common stock and the one you have, like other commodity ETF's is based on the entire Futures Curve, meaning the ETF owns a certain amount of each contract on the Futures curve. So when the near term contract expires, they have to sell those contracts (to avoid taking or making delivery) and re deploy the money along the curve at certain prices (could be higher or lower depending on whether the curve is in contango or backwardation).

But to answer reverse stock splits. It could be to prevent from being delisted and being relegated to the pink sheets or the over the counter bulletin board.. Depending on exchange, stocks get delisted if they fall below a certain price. So by shrinking the float you increase the price per share, but total valuation remains the same.
Interesting stuff. It is owned by Blackrock and the shares were supposed to be backed by that amount(X100TH)of physical gold...I've been hearing lately that there is not enough physical silver/gold to cover these shares if someone actually took delivery...just a head scratcher.
 

FireFoley

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Interesting stuff. It is owned by Blackrock and the shares were supposed to be backed by that amount(X100TH)of physical gold...I've been hearing lately that there is not enough physical silver/gold to cover these shares if someone actually took delivery...just a head scratcher.

Well since it is Blackrock then I know you are getting fist fkked without lube and Larry Fink is getting richer by the second. These are the same thieves who already have convinced the gov't that you are too stupid to manage your own money, hence why 401K's only allow funds (for the most part). Now these same thieves are trying to convince the gov't that you are so stupid that you should be given a retirement annuity, managed by Blackrock, and in exchange for a set amount of money paid to you monthly in retirement, Blackrock gets use of your money for all those years you are working and can do whatever they want, b/c your paltry monthly amount is secure in the future (cough cough). the house always wins.
 

Concrete Helmet

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Jul 29, 2014
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Well since it is Blackrock then I know you are getting fist fkked without lube and Larry Fink is getting richer by the second. These are the same thieves who already have convinced the gov't that you are too stupid to manage your own money, hence why 401K's only allow funds (for the most part). Now these same thieves are trying to convince the gov't that you are so stupid that you should be given a retirement annuity, managed by Blackrock, and in exchange for a set amount of money paid to you monthly in retirement, Blackrock gets use of your money for all those years you are working and can do whatever they want, b/c your paltry monthly amount is secure in the future (cough cough). the house always wins.
:lol2: I'm not gonna marry the damned Trust...just gonna dump it when the price of gold goes up a bit more and it had a lower expense than most other funds of it's kind....:lol2:
 

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