FXBY

OTC that doesn't close until May 6. Not a round up but some profit possible via the cash payout. It's a bit complicated, please read.

OTC: I'm buying 4 shares of $FXBY by market close on May 6, 2021. 1:5 ratio reverse split, fractional shares are paid cash at the NAV value, which is currently 40% higher than share price.

So this one’s a bit different. Normally when a reverse split pays cash for fractional shares, they’re paying this cash value of shares at the time of the split. So the cash you get back is roughly the same as if you bought exactly at 4pm on the last day before the split.

$FXBY is different, as it’s a closed-end fund. $FXBY is not a company, but rather a managed fund that holds stock of other companies. It’s main holding as of February 28 was Alphabet, a.k.a. Google. If you were to sell everything $FXBY holds, it would be worth about $4.43 per share. This is called it’s net asset value, or NAV for short.

When $FXBY pays cash for fractional shares, they pay it at the current NAV, not share price. We’re in luck because its NAV is currently about 40% higher than its share price, so I’m hoping to make a small profit.

Here’s the trade I’m doing: I’m buying 4 shares of $FXBY on or before May 6 (I actually bought this morning). I was able to get in the morning at $3.14 per share, so $12.56 total. After the split they should pay me cash for 4 shares at the NAV price of $4.43, so $17.72. (This could change between now and when the split occurs May 6, but I expect the stock is more likely to increase in value if anything so I’ve established a position early.) If these prices hold, that’s a profit of $5.16 at a 41% return. As with other trades, I expect this to work across multiple accounts.

It’s a bit complicated, so please feel free to ask any question via email or on Twitter. This is the first time I’m doing a cash-out reverse split with a closed-end fund, so there’s some risk that it doesn’t work the way I’m expecting it to, so do your research. As always, nothing I say is investment advice.

For updates, see: https://www.reversesplitarbitrage.com/splits

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