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Before the 2020 April reverse split of UCO Proshare, I hold 39797 shares of UCO with an average cost of 1.4282 USD/share.

After the 1-25 reverse split, as far as I understand, the number of shares should be divided by 25 and the average cost should be multiplied by 25.

But after the account information is updated, the number of shares is 1591 which is roughly 39797/25 which is correct, but the average cost is around 17 USD. This results that my total cost shrinks like 50%.

I spent 80K cad to buy this and now the total cost (quantity * average cost) is only around 40K. 40K just disappears!!!!!

Does the bank counting the number wrong? Or I just did not understand the reverse split completely? Already called the BANK, they said they will let the number guy to recalculate the number. Still waiting for the response.

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  • The mix of USD and CAD in your question is confusing things. Which currency were you told would be used to calculate your capital gain/loss?
    – Ben Voigt
    Commented Apr 23, 2020 at 17:40
  • Sorry for the confusing. The unrealized gain/loss is calculated using CAD. And the average cost and current price are shown by USD.
    – Cuzaker
    Commented Apr 23, 2020 at 18:45

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Here's an article titled: Leveraged Oil ETF UCO Undergoing A 1:25 Reverse Split

Here are the first few paragraphs:

Bloomberg Crude Oil Fund (UCO) was trading at $1.35 and woke up this morning seeing the price at nearly $34, don't get too excited.

The fund is executing a 1:25 reverse split in order to get in front of any potential regulatory issues from the share price dropping too low. It's all an accounting procedure. There are no huge gains to be had here.

In fact, UCO is about to get hammered again. At Tuesday's market open, it traded around $20, another 40% loss and top of 2020's already steep losses.

Your explanation of a reverse split is correct. The problem is that share price is being hammered, now trading at just above $17 per share. Here is some historical data:

Date         Open    High    Low      Close  Adj Close     Volume
Apr 23, 2020 18.42   19.60   16.82      17.37    17.37   24,129,401

Apr 22, 2020 16.59   18.44   15.46      15.66    15.66   36,779,200

Apr 21, 2020 23.30   24.69   11.00      14.57    14.57   51,827,000

Apr 21, 2020 1:25 Stock Split

Apr 20, 2020 33.25   35.75   32.00      33.75    33.75   563,963,300

enter image description here

Note that the reverse split does not change your cost. It only changes the number of shares owned and share price.

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  • Thanks for responding. The thing I don't understand is that before the split I add my market value with the unrealized gain/loss, it is around 80K CAD, but after the split, if I add my market value with the unrealized gain/loss, it is only 40K CAD. The unrealized gain/loss only shows couple of thousands gain/loss, which from my understanding it should show at least 40K loss. That's what I don't understand.
    – Cuzaker
    Commented Apr 23, 2020 at 18:26
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    Your cost is whatever dollar amount you paid for all of the shares. Market value is shares owned times current price. The difference between cost and current value is the unrealized capital loss. If your numbers don't match up with your bank statement then you need to sort this out with the bank.
    – Bob Baerker
    Commented Apr 23, 2020 at 19:49
  • @Cuzaker: Possibly your loss has been realized. I don't know if Canada has a "wash sale" rule, but if it does then you have to carry forward the loss anyway, so it would make no difference. It the loss is realized and there is no wash sale, then you can use it on your 2020 taxes (to cancel out realized gains in other positions)
    – Ben Voigt
    Commented Apr 24, 2020 at 15:12
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Nothing looks wrong, it just tanked further after the reverse split.

Immediately after the reverse split it was trading around $28 and has slid to $17 since then.

enter image description here

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  • Thanks for responding. I did realize that it is tanking further. I just don't understand if it is tanking further, doesn't the current price should be affected? Does that relate to the average cost? Before the split, if I add the market value with the unrealized gain/loss, it is around 80K CAD, but right now, it is only around 40K. That's what I am wondering, what makes this difference?
    – Cuzaker
    Commented Apr 23, 2020 at 18:02
  • Are you saying you're not showing an extra 40k of unrealized loss?
    – Hart CO
    Commented Apr 23, 2020 at 18:07
  • Yes, my current unrealized gain/loss is around 1000, which in fact it should show, from my understanding, at least 40K something. That is what I am wondering about.
    – Cuzaker
    Commented Apr 23, 2020 at 18:22

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