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发帖数: 10345 | 1 这是要把投机客全部歪炮的节奏了
UWTI Market Cap Continues to Grow
The world saw oil prices decline in 2014 and early 2015 on the heels of
record-level well productivity, advances in extraction techniques and a dip
in global demand for crude. Combine this with a relatively stronger dollar,
and American consumers have received a huge break at the pump. Commodity
investors haven't been as ecstatic; crude prices declined nearly 60% over
the course of one year. In spite of this, one exchange-traded note (ETN)
continues to generate investor attention – VelocityShares 3x Long Crude Oil
ETN (UWTI).
Market capitalization for UWTI continued to grow throughout 2015 from a
first-quarter figure of about $860 million to an early third-quarter market
cap of more than $960 million. At first sight, this doesn't make any sense,
since share prices declined by more 95% since June 2014. This means an
enormous amount of new outstanding shares must be emerging to prop up market
cap. Most markets don't reward risky securities that are in the middle of
such a massive long-term drop.
Moreover, UWTI is a leveraged daily oil ETN. These securities tend to make
very poor buy and hold prospects because of the fees and inefficiencies in
the ETN structure. An investment in UWTI should, at least in theory,
indicate that investors believe they can make a quick one- to two-day profit.
There is a method to the investors' madness surrounding UWTI, although
differing minds can argue about whether it's a good method. Those jumping in
and buying at such a low value would argue they are gaining leveraged
access on a historically profitable commodity just before a bounce; after
all, buying low is an elementary trading principle. Those sitting out can
hold this up as an example of why leveraged traders tend to lose more than
they win.
HOW MARKET CAPITALIZATION GROWS AND WHAT IT MEANS
The size for any company stock, mutual fund or exchange-traded instrument is
traditionally measured in terms of market capitalization. Market cap
reflects how much equity capital that the general public has been willing to
pour into the investment. Larger capitalizations are signs of successful,
stable and trustworthy performance.
Market capitalization only has two components: total outstanding shares and
market price. As a simple hypothetical, a company that has 1 million
outstanding shares valued at $100 each would have a market capitalization of
$100 million.
Therefore, capitalization only grows when more shares are outstanding or
when share prices increase. In the case of UWTI, which traded near $1.75 in
mid-July after starting the year at $4.60 and has fallen all the way from $
40 just one year prior, the growth obviously comes from extra outstanding
shares. Someone still has to be willing to buy leveraged oil ETN shares at a
time when oil prices are low.
JUMPING INTO THE BULL POOL
Many believe that crude oil prices are heading for what traders refer to as
an inflection point. Market experts use terms such as "supply glut" and "
inventory imbalances" that need to be exhausted at some point. They don't
believe the recent surge in oil production and slump in oil demand will
continue indefinitely; they suspect a bull rally.
This is where the leveraged UWTI play makes some sense. Since the ETN tracks
the S&P GSCI Crude Oil Index ER and applies a 3x leverage, even a modest
gain in crude should see a huge spike in share price for UWTI. Investors can
then sell and realize a capital gain.
Eager investors have been waiting for a bounce in crude for a long time.
UWTI is an aggressive play, but it isn't unreasonable if you are convinced
that the inflection is just around the corner. |
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