AdvisorShares has announced a reverse split for its MSOS Daily Leveraged ETF MSOX, effective November 26, 2024.

A reverse split reduces the number of its outstanding shares, increasing the share price proportionally. In this case, the split will be 1-for-20, with every 20 shares of MSOX consolidated into one share.

Key Details:

• Share Consolidation: If you own 1,000 shares at $10 per share (worth $10,000), post-split you will hold 50 shares at $200 per share, still totaling $10,000. Your investment value remains unchanged, only the number of shares and price per share adjust.
• New CUSIP: The ETF’s identifier (CUSIP) will change to reflect the reverse split, so investors should take note of the updated CUSIP.
• Impact on Trading: MSOX will start trading on a split-adjusted basis on November 26, with the share price expected to be roughly 20 times higher.

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Why It Matters:

The reverse split is aimed at reducing the number of outstanding shares, potentially improving liquidity and making the ETF more attractive for institutional trading. However, this ETF is specifically designed for active, sophisticated traders seeking leveraged exposure to the cannabis industry. It targets twice the exposure of its underlying assets but may not always hit this exact leverage.

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Tax Consideration

Investors could end up with fractional shares due to the split. Since fractional shares cannot be traded, they will be redeemed for cash, which might trigger a taxable gain or loss.

In summary, the reverse split will not affect the overall value of your investment, but it does change the share count and price. It’s important for investors to consult their financial advisor if they have questions about potential tax implications or the ETF’s risk profile.

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