Even YOU can handle reverse splits!
What are they & how painful can they be?
A friend was recently introduced to the world of stock splits and reverse stock splits as he currently holds MLGO. Usually there is some notification to prepare for this activity, but we couldn’t find any info through MLGO pages on finviz.com or Yahoo Finance. We did, however, find info at:
https://www.nasdaq.com/market-activity/stock-splits
You can also search the SEC site for “reverse stock split” and “last 30 days” to see if any of your tickers are on there?
https://www.sec.gov/edgar/search/
Depending on where you live, the bookkeeping for tax purposes might be different so be sure to chat with your tax specialists about how to treat this. You may see something like this:
“… no disposition or acquisition is considered to have occurred, and the event is not taxable. However, the adjusted cost base (ACB) of the shares must be recalculated to reflect each split or consolidation, and when there is a disposition of the shares, the new ACB will be used to calculate the capital gain or loss.
This ACB is calculated by dividing the total cost of the shares purchased (usually including any expenses involved in acquiring them) by the total number of shares owned. For example, if you owned 100 shares of XYZ Ltd. that cost $1,000 to purchase, the ACB of each share would be $10 ($1,000 ÷ 100). If the stocks subsequently split 2-for-1, you would now own 200 shares of XYZ Ltd. The ACB of each share must be recalculated and would now be $5 ($1,000 ÷ 200).” - Canada Revenue Agency
For now, please familiarize yourself with the 2 concepts at good old Investopedia.
https://www.investopedia.com/terms/s/stocksplit.asp
https://www.investopedia.com/articles/01/072501.asp
https://www.investopedia.com/ask/answers/what-stock-split-why-do-stocks-split/
But be aware, there could be downsides to reverse stock splits. The first one is that your sell price will be affected and you could owe more commission than you originally budgeted for. And there’s more…
I recently held a position that was affected by a reverse split which made the price higher but not the overall value to my pocketbook. Okay, that’s somewhat normal.
The stock had fallen below $1.00 (USD) and needed to be raised in order to remain listed on the exchange; this is often achieved by the company paying for a reverse stock split. Unfortunately, the stock continued to get battered and dropped down again. It is currently listed on the Over-The-Counter (OTC) market.
Thankfully, my low exposure in terms of percentage of portfolio means that the loss will be minimal compared to the gains of all my other positions. In fact, out of my last 306 positions closed at an average of over 8% each, I’ve only lost money on 2 of those positions. Yay, money management!
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My Personal Stats
You may (and likely should) find your numbers are better than this as my calculations include pre-Feb 2024 phases of experimentation that SubStack readers haven’t participated in.
AVG TRADE DAY GAIN ON SELLS vs AVG TRADE DAY BALANCE
0.90 %
PROJECTED AVG ANNUAL COMPOUNDED RETURN
837.29 %
AVG RETURN PER SELL
8.69 % EVERY
9.9 DAYS
POSITIONS IN PLAY
47
7 sells on Friday, 22mar2024
15 / 4 (26.67%) / 2 (50.00%)
From 15 potential buys we had 8 bids fill for a record (53.33% of bids). 2 of the buys sold-same-day at a 5% gain (25.00% of bids filled) plus 5 more recent positions sold at 5% profit each.
[On a strong day for the SPY and QQQ, I expect to buy at least 35% of my bids.]
Bought 22mar2024: BACK, CVAC, LUNR, MSGM
Sold before 25mar2024: BACK, LUNR
Another 5 x 5% sells included:
- HROW and SURG from buys you may have made on the 21mar2024 bid list. (yesterday)
- ACHL and AEHL from the 20mar2024 bid list.
- ASTR from the 13mar2024 bid list.
0 buys on my personal portfolio, as my 2% bid pools were maxed-out.
1 personal sell for me today on BACK.
I currently average 4.0 sells per trade day on my personal positions. There are about 252 trading days per year.
Remember that my 5% gain + expenses may be different than yours as I pay 1 cent per share commission (both ways) and I allow another penny for other account expenses + 1 cent more for rounding errors. Thus, a $1.00 buy will actually sell for:
($1.00 x 1.05) + $0.04 = $1.09
“I met her on Monday – ‘twas my lucky bun day” – David St. Hubbins
22-Mar-24
ADTX
3.25
AUUD
2.27
BTCS
1.32
BQ
0.28
CASI
3.11
CING
1.27
CYTO
1.27
GRYP
1.61
IMTE
2.50
INHD
0.87
NMHI
0.95
MLGO
5.07
REKR
2.04
SYBX
1.82
VERO
0.70
VRM
13.72
Remember, these BIDS are entered as STOP LIMIT – DAY
and ASKS are LIMIT – GTC.
For money management safety, never put more than 2% of your balance into any one position. (Some exceptions apply in bold below). You may want to consider 1% positions if your balance is more than 5 figures. THIS IS TOTALLY YOUR DECISION.
You can now bid on all stocks listed even if you already own them and PROVIDING the potential negative effects of your broker’s commission structure makes it logical and profitable for you to do so.
I don’t use stops. They drive me crazy and have cost me more money than I care to discuss. That said, it’s important to realize that this is a very contrarian view compared to most of the industry. I average down in a strictly controlled method as noted in the bolded bid update above.
On average, 23.3% of my buys sell the same day, 40.1% more sell in calendar days 2-7, and 36.6% sell in more than 7 calendar days. You may (and likely should) find your numbers are better than this as my calculations include pre-2024 phases of experimentation that SubStack readers haven’t participated in.
Here’s to a great, but short, week!
Brian
Bought 22mar2024: BACK, CVAC, LUNR, MSGM
Sold before 25mar2024: BACK, LUNR
Bought 21mar2024: HROW, LCID, REBN, SURG, TNON, VIEW, ZIM, ZJYL
Sold before 25mar2024: HROW, REBN, SURG, ZJYL
Bought 20mar2024: ACHL, AEHL, ATGL, CONN, FUBO, FUFU, IMMX, PLCE, QS, RAPT, REKR, RMCO, STEM, TWOU, UIS, UK, YOSH
Sold before 25mar2024: ACHL, AEHL, CONN, IMMX, RMCO, STEM, YOSH
Bought 19mar2024: DBGI, EKSO, FET, OVID, SPRC, ZCAR
Sold before 25mar2024: OVID, SPRC
Bought 18mar2024: APYX, CKPT, EFSH, FSLY, IVDA, NKLA, NOVA, OCG, ONDS, OPEN, OUST, PHAT, PRME, TTOO, UPLD, VOR
Sold before 25mar2024: EFSH, IVDA, NOVA, OPEN, PHAT, UPLD,
Bought 15mar2024: AMRX, BIOR, BTDR, CLEU, GREE, HEPA, LGHL
Sold before 25mar2024: AMRX, BTDR, CLEU, GREE,
Bought 14mar2024: AKA, KITT, LPSN
Sold before 25mar2024: AKA, KITT
Bought 13mar2024: AAN, ASLE, AUR, CEPU, HKD, IDAI, RDI, RIOT
Sold before 25mar2024: ASLE, AUR, CEPU, IDAI, RIOT,
Bought 12mar2024: ACU, ASTR, BTOG, EBIXQ, GENK, JOAN, UP, TOI, ZCMD
Sold before 25mar2024: ACU, BTOG, EBIXQ, GENK, UP, TOI, ZCMD (could have played it twice)
Bought 11mar2024: AEI, AUTL, ATGL, DAVA, IRWD, SQNS, ZIM
Sold before 25mar2024: AUTL, ATGL, DAVA,
Bought 08mar2024: BACK, BBLG, IRBT, LPTX, PCT, REVB, TBLA, TLRY, WRAP, XAIR
Sold before 25mar2024: BACK, BBLG, LPTX, PCT, TLRY
Bought 07mar2024: AADI, AMPX, EKSO, LDTC, LPTV, RMCO, RVSN, VERI
Sold before 25mar2024: AMPX, RVSN, VERI
Bought 06mar2024: CETY, DTCK, FCEL, HOLO, NERV, REKR
Sold before 25mar2024: CETY, DTCK, HOLO, NERV
Bought 05mar2024: AAN, ALRN, AUUD, CYA, MINM, SNAL, SQNS, WAVD
Sold before 25mar2024: ALRN, AUUD, CYA, MINM, WAVD
Bought 04mar2024: ANTE, ATCH, BOF, FET, GFAI, IBRX, RENB, STI, VERO, YOSH
Sold before 25mar2024: ANTE, BOF, GFAI, IBRX, RENB, STI, YOSH
Bought 01mar2024: ALCE, AMBP, ATGL, BBLG, ILAG, LCID, LGHL, TWOU, UPXI
Sold before 25mar2024: ALCE, AMBP, BBLG, UPXI,
Bought 29feb2024: ACHR, AUUD, EGHT, PLUG, RIVN, RVSN, STGW, SXTC, SYBX, SYRA, TWKS, ZJYL
Sold before 25mar2024: ACHR, AUUD, EGHT, PLUG, RIVN, RVSN, STGW, SXTC, ZJYL
Bought 28feb2024: AMCX, ENSC, GATO, IMTE, JFBR, ONMD, PBYI, SDIG, SELX, SNTG, TLS
Sold before 25mar2024: GATO, JFBR, ONMD, PBYI, SELX, SNTG, TLS
Bought 27feb2024: ADIL, ANTE, BELFB, BREA, CANOQ, EBIXQ, GRYP, HGAS, IDAI, LBBB (NMHI), OIS, PCT, RIVN, SLRN, SYRA
Sold before 25mar2024: ADIL, ANTE, BELFB, BREA, CANOQ, EBIXQ, GRYP, HGAS, IDAI, OIS, PCT, RIVN, SYRA
Bought 26feb2024: BFX (bankrupt 05mar2024), BSGM, CHSN, CONN, GRYP, IDAI, RAPT, SLRN, TRUP, UIS, VRM
Sold before 25mar2024: BSGM, GRYP, IDAI, SLRN, TRUP, UIS, VRM
Bought 23feb2024: ALCE, EBIXQ, EDAP, FSR, GLRE, PLCE, RVSN, SSRM, VRM, WAVD
Sold before 08mar2024: ALCE, EBIXQ, EDAP, FSR, GLRE, PLCE, RVSN, SSRM, VRM, WAVD
Bought 22feb2024: AUR, BE, DBGI, EFSH, GFAI, GLRE, HLF, NKLA, OZ, PRME, SOUN, TDS
Sold before 25mar2024: BE, EFSH, GFAI, GLRE, HLF, PRME, SOUN, TDS, OZ
Bought 21feb2024: AEHL, ANAB, ENVB, KUKE, MTC
Sold before 25mar2024: ANAB, ENVB, KUKE, MTC
Bought 20feb2024: BQ, CRDL, GMBL, GRYP, HLF, MSGM, PXDT
Sold before 25mar2024: CRDL, GMBL, GRYP, HLF, MSGM, PXDT
Disclaimer
The contents of this newsletter are believed to be reliable, but the accuracy or completeness of any information contained herein is not guaranteed and members of Baker’s Stock Trading Aids shall not in any way be liable for any delay in keeping such information current. Members of Baker’s Stock Trading Aids specifically disclaim all warranties, express or implied.
Although Baker’s Stock Trading Aids believes that the information provided on these pages is accurate, it provides no warranty with respect thereto. The information may not be suitable for all persons; it should not be relied upon in connection with a particular investor's trading; and, is not intended to be, nor should be construed as, an offer, recommendation or solicitation. Baker’s Stock Trading Aids does not provide investment advice, but a record of potential and actual trades by the author. The information in this newsletter is not intended for persons who reside in jurisdictions where providing such information would violate the laws or regulations of such jurisdiction.
Trading of securities and derivatives may involve a high degree of risk and investors should be prepared for the risk of losing their entire investment and losing further amounts. Using borrowed money to finance the purchase of securities involves greater risk than using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines. Baker’s Stock Trading Aids does not provide investment advice or recommendations regarding the purchase or sale of any securities or derivatives.
That's very helpful to know!