The United States Oil Fund, which trades under the ticker USO, on Wednesday announced an 8-for-1 reverse stock split.
ticker, announced another change to the fund's makeup on Wednesday as it tries desperately to retain investors after a 77% drop this year.USO that will go into effect after the close on April 28.
A reverse stock split reduces the number of shares outstanding, but raises the price of the stock. This is a cosmetic change and the net effect to the return for existing shareholders will be nothing. None of the fund's fundamentals are altered.The fund, which is popular with retail investors, seeks to track the price of oil. USO has sustained heavy losses as the price of crude falls.
When asked why the fund keeps changing its structure, USCF chief marketing officer Katie Rooney told CNBC the following: "Due to extraordinary market conditions in the crude oil markets, including super contango, USO has invested in other permitted investments, as described in the prospectus." Hayman Capital Management CIO Kyle Bass, who has been a vocal critic of commodity-focused ETFs geared toward retail investors, called the reverse split "garbage" in a tweet. Bass also has a short position in in some of these ETFs."At best, they are expensive ways to gain programmatic futures exposure," he said of commodity-based ETFs on Monday. "At worst, they are designed to implode. Still, money continues to flow into the USO ETF.
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