What Is a “Reverse” Stock Split?

Posted on October 8, 2022 by Dr. Marcinko

By Staff Reporters

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Hippo Holdings Inc. (NYSE: HIPO) intends to file a proxy statement with the Securities and Exchange Commission in connection with a special meeting of stockholders to be held on August 31, 2022. The proxy statement will include a proposal for a reverse stock split at a ratio in the range of 1-for-20 to 1-for-30 and the reduction of the number of authorized shares of capital stock of the company by a corresponding proportion.

The reverse stock split to be proposed to Hippo stockholders in the proxy statement is intended to resolve the issue raised in a non-compliance notice Hippo received from the New York Stock Exchange (the “NYSE”) on July 19, 2022 regarding Section 802.01C of the NYSE Listed Company Manual due to the average closing price of the company’s common stock being less than $1.00 over a consecutive 30 trading-day period. The notification has no immediate effect on the listing or trading of Hippo’s common stock on the NYSE.

Hippo can regain compliance at any time within the six-month period following receipt of the NYSE notice if on the last trading day of any calendar month during the cure period the company has a closing price of at least $1.00 per share and an average closing price of at least $1.00 per share over the 30-trading day period ending on the last trading day of that month.

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SO – WHAT EXACTLY IS A REVERSE STOCK SPLIT?

A reverse stock split is a type of corporate action that consolidates the number of existing shares of stock into fewer (higher-priced) shares.

A reverse stock split divides the existing total quantity of shares by a number such as five or ten, which would then be called a 1-for-5 or 1-for-10 reverse split, respectively.

A reverse stock split is also known as a stock consolidation, stock merge, or share rollback and is the opposite of a stock split, where a share is divided (split) into multiple parts.

CITE: https://www.r2library.com/Resource/Title/0826102549

What are pros and cons of a reverse stock split?

  • Companies prices come down
  • Outstanding shares goes up, with this their financial ratios like EPS, RoE goes down.
  • Market cap remains same.
  • No Fresh equity are issued hence there is no dilution of equity.

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MORE: https://www.amazon.com/Comprehensive-Financial-Planning-Strategies-Advisors/dp/1482240289/ref=sr_1_1?ie=UTF8&qid=1418580820&sr=8-1&keywords=david+marcinko

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Filed under: Glossary Terms, Health Economics, Investing | Tagged: , , , , | 2 Comments »

What’s Up with VIX Stock Market Volatility?

Posted on October 8, 2022 by Dr. Marcinko

What it is – How it works
[Courtesy Wikipedia and staff reporters]

UPDATE: https://www.msn.com/en-us/money/markets/wall-street-s-biggest-fear-gauge-is-broken/ar-AA11lGGd?cvid=12c11009edc54ddbafbb7df5e2558095

AKA “The Fear Gauge”

The CBOE Volatility Index, known by its ticker symbol VIX, is a popular measure of the stock market’s expectation of volatility implied by S&P 500 index options, calculated and published by the Chicago Board Options Exchange (CBOE). It is colloquially referred to as the fear index or the fear gauge.

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According to Wikipedia, the formulation of a volatility index, and financial instruments based on such an index, were developed by Menachem Brenner and Dan Galai in 1986 and described in academic papers. The authors stated the “volatility index, to be named Sigma Index, would be updated frequently and used as the underlying asset for futures and options. … A volatility index would play the same role as the market index play for options and futures on the index.”

In 1986, Brenner and Galai proposed to the American Stock Exchange the creation of a series of volatility indices, beginning with an index on stock market volatility, and moving to interest rate and foreign exchange rate volatility. In 1987, Brenner and Galai met with Joseph Levine and Deborah Clayworth at the Chicago Board of Options Exchange to propose various structures for a tradeable index on volatility; those discussions continued until 1991.

The current VIX concept formulates a theoretical expectation of stock market volatility in the near future. The current VIX index value quotes the expected annualized change in the S&P 500 index over the next 30 days, as computed from the options-based theory and current options-market data.

MORE: https://www.amazon.com/Comprehensive-Financial-Planning-Strategies-Advisors/dp/1482240289/ref=sr_1_1?ie=UTF8&qid=1418580820&sr=8-1&keywords=david+marcinko

Assessment

The CBOE retained consultant Robert Whaley in 1992 to develop a tradable volatility instrument based on index option prices.[4] Since 1993, CBOE has published VIX real-time data. Based on historical index option prices, Whaley has computed a data series of retrospective daily VIX levels from January 1986 onward.

TODAY: 31.36 VIX [up 2.75%]

Conclusion

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What is an INVERSE ETF?

Posted on October 8, 2022 by Dr. Marcinko

By Staff Reporters

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What are inverse ETFs?

An inverse ETF, often known as a bear or short ETF, is an exchange-traded fund designed to profit from a market decline. These short-term, publicly traded investments are utilized by investors who believe that a particular market or individual security will lose value in the near future. They may use inverse ETFs as a way of hedging losses during a downturn.

“Inverse ETFs are a tool to hedge a stock portfolio,” according to John DeYonker. “If the S&P 500 is your benchmark, and it goes up 1%, then your hedge will go down 1% and vice versa. Hedging with inverse ETFs can reduce volatility for investors—it’s like insurance.”

Investors may also use inverse ETFs as a way to take advantage of a predicted decline. In this way, they may be used as an alternative to short selling. For example, if an investor believes that the oil industry will have a setback in the immediate future, they may choose to purchase an inverse ETF of securities tied to energy producers. If correct in their prediction, the investor’s inverse ETF may recognize a profit. If the investor is incorrect, and the market or individual security increases in price, they may see a loss.

An investor who believes that the S&P 500 will decline, for example, may choose to purchase shares of the ProShares Short S&P 500. This inverse ETF’s value is inversely proportional to the overall S&P 500 index.

Inverse ETFs are generally considered to be highly volatile investments, as their losses typically compound daily. This makes inverse ETFs more risky than the index to which they are tied.

CITE: https://en.wikipedia.org/wiki/Exchange-traded_fund

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RELATED: https://medicalexecutivepost.com/2021/12/26/podcast-what-is-a-leveraged-etf/?preview=true

MORE: https://www.routledge.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

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What is the WAFFLE HOUSE Index?

Posted on October 8, 2022 by Dr. Marcinko

mm! mm! GOOD!

Courtesy: www.CertifiedMedicalPlanner.org

415 Restaurants Closing in Georgia and Elsewhere

The Waffle House Index [WHI] is an informal metric named after the Waffle House restaurant chain, headquartered in Georgia, and used by the Federal Emergency Management Agency (FEMA) to determine the effect of a storm and the likely scale of assistance required for disaster recovery.

LINK: https://www.amazon.com/Dictionary-Health-Insurance-Managed-Care/dp/0826149944/ref=sr_1_4?ie=UTF8&s=books&qid=1275315485&sr=1-4

IOW: “If you get there and the Waffle House is closed? Well, that’s really bad”, according to Craig Fugate – Former Head of the Federal Emergency Management Agency [FEMA].

MORE: https://en.wikipedia.org/wiki/Waffle_House_Index

QUERY: Have we hit the WHI wall regarding post Covid-19?

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Assessment: And so, your thoughts and comments are appreciated.

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THANK YOU

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