Friday, November 11, 2016

iShares REM: Reverse Split

I was surprised today to see that my REM shares (iShares Mortgage Real Estate ETF) are now worth more than $40 (US). The last time I looked those shares could be bought for something in the neighbourhood of $10 (US). Why the jump? A reverse split.

A reverse split of 1-for-4 took effect before the market opened this past November 7, 2016. Each REM share was converted to one quarter of a (New) share in the popular iShares capped ETF. In other words, if you owned 800 old shares, you only own 200 new shares today.

Why the reverse split? I have no idea but with a new president-elect Donald Trump led government in the States, an increase in interest rates may be in the offing. If so, an ETF like REM, with its high 13%-plus dividend, will come under downward pressure. The new value gives REM room to fall. (No matter who was elected, rates will go up at some point. Of that, there is no doubt.)

If REM rallies next week, I may sell. When the dust settles, after the inauguration in early 2017, I may buy back in if the price is right.
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This post was taken down for examination. I have reposted it as of June 16, 2018. REM today is selling in the mid forties and yielding better than 12%. I should have held my ground. Selling REM was a mistake.

If and when REM drops back down into the thirties, I will give it serious consideration. Rates have started climbing and two more hikes are expected before the end of the year. There may be a buying opportunity in the future.

Remember I am not a financial adviser. I am a retired photojournalist. I post my thoughts on investing for a number of reasons. One big driver is a hope that I will get some feedback. I am out to learn from others and I hope my writing will promote discussion.